International University College

Smoky-group LTD Smoky-groupLtd Business Plan

Made by Todor Georgiev 2nd HME

1. Name, location, address, contact

information, fax, contact name.

Company Name: "Smoky-group" Ltd. VAT number: 127621146 Location: Head Office - Varna Address: Vl. Varnenchick N35 2nd floor MRP: Todor Rosenov Georgiev Contact with us: Todor Rosenov Georgiev - Chief Executive Phone: 0885 72 36 60

"Smoky-group" Ltd. is a company developing its activities in distribution and marketing of tobacco products. The company serves all retail outlets on the territory of Shumen, Targovishte and Razgrad. The Company is the sole representative of tobacco products Bulgartabac Holding, and a representative of Philip Morris Group.

2. Company goal, mission and services

"Smoky-group" Ltd. is a company carrying on trade and distribution of tobacco products of certain brands. The objectives of the company are keeping the market share of manufactured products from Bulgartabac Holdiing and increasing market share of those produced by Philip Morris. As a major competitive advantage can be the established distributor network in the regions of Shumen, Targovishte and Razgrad. On the territory of these areas other companies dont have the right to trade in products of Bulgartabac Holding. The main service is the distribution of tobacco Bulgartabac Holding and Philip Morris in all outlets.

3. Brief history
All companies engaged in this activity on the territory of Shumen, Targovishte and Razgrad combine into a association, building a distributor network. Thus they believe that will operate on:

- quality - will minimize costs - improve organizational structures - using the best experience of various companies. Pooling is defined as the integration horizontally. Mergers lead to reduced competition, and achieve economies of scale.

4. Structure of capital

Equity - BGN 200 000 Debt capital 50% of the equity of companies 50% bank loan

The market is wide in terms that cover three areas in the country of 26 or approximately 12% of it, the market in the territory of Shumen, Razgrad and Targovishte is entirely dependent on the company. The main objective of the company is currently restoring the level of sales since 2008. After the sale of some of the factories of Bulgartabac Holding, creates a competitive producer - "Tobacco King". Currently competing manufacturers occupies about 30% of the Bulgarian market for cigarettes. The rapid expansion leads to

loss of both Bulgartabac Holding and distributors of concern, such as "Smoky-group" LTD. Besides "Tobacco King" there are many imported brands aimed expanding its activities in the country. On the other hand the increase in excise duty reduces the consumption of goods by encouraging smuggling. Assessment on the market today can be described as unsatisfactory. The company faces many problems - highly competitive influence, new laws restricting smoking in public places, raising excise taxes, a growing number of campaigns of the European Union and various non-governmental organizations to combat smoking. Consumers are moving away from its products, customers of Smoky-group lower their orders to the contracted demand, the market share is declining; profit falls. Although the company is still leading the territory in which it operates, the problems are not few. Solutions are hard to find. The environment is dynamic and constantly changing, and the company must remain flexible. bjectives of the company are associated with spending cuts. This is because the percentage of markup on traded goods is fixed. It follows that to increase profitability, you should increase sales. Since currently there is a drop in demand for tobacco, the main objective of "Smoky-group" Ltd. is maintaining the levels of sales in 2009. Keeping the level from 2009 in 2012 and the company will resume gradually increasing revenues. Reaching the 2008 level is a prime target for 2013. Then the company will increase its profitability by realizing - big profits.

When creating the company we purchase equipment and transport machinery for raising labor productivity. The fleet of "Smoky-group" Ltd. includes 21 buses and 3 small trucks, which do the distribution process. For transporting cigarettes from factories to the central warehouse we use hired transport. The staff consists of 32 persons - head of a warehouse, five cashiers, and twenty-four sales representatives. Sales representatives are equipped with laptops, barcode scanner, fiscal printer. Located within the premises, agents accept application through barcode scanner, which transfers the information into your laptop. By fiscal printer is printed fiscal receipt which is attached to document - invoice. Invoice shall be made materially responsible person of the mall premises, together with the product. Of commercial equipment is an innovative approach using every aspect of the functionality of new technologies. This is a good solution for quickly and efficiently carrying out the activities. Through computerization keep track stock, sales of each dealer, and the exact number of purchases by each customer. This information is essential for monitoring the market. Using it can quickly follow the indicators of demand and the effectiveness of the activity of each employee.

5. PESTEL analysis
Usually cigarettes are paid at the time of delivery. Years ago, the minimum charge of one object was the number of cartons of cigarettes. Currently due to high prices, the company was forced to sell goods to the number of boxes in order to maintain the variety of

outlets. If the distributor visits the site often can negotiate a deferred payment or payment in one day a week. Discounts are given if the traders involved in promotions for customers if the products are at eye level, if the object has a display of the brand, which glows and if the object is primarily offers branded or brand of a company. Retailers receive discounts on quantities ordered. Concerns cover cigarette licenses for the sale of cigarettes and pay annual fees of restaurants, bars and hotels to sell only their exclusive brands. Additional discounts cafe - clubs and bars can get if they are mounted screens, which are projected ads or agree to carry out night specials to customers. In recent years, in the words of the producers, more companies are focusing on expanding sales of its petrol stations, hypermarkets and specialty stores for alcohol and cigarettes, and these are their key customers. The big problem for all is that in places where cigarettes are sold legal, especially in grocery stores and grocery stores in small towns, often sold cigarettes without excise label. Exactly Illegal Market - the main problem of all manufacturers, distributors, retailers. This relationship is strengthened given that increased dramatically after the next jump in cigarette prices between 1.30 and 1.50 EUR for new rates in 2010. According to Ruben Rodriguez trafficking in Bulgaria has several incentives. For example, products from neighboring countries with much lower prices. In Serbia and Ukraine cigarettes are three times cheaper because of lower excise duty and this makes them very attractive as an object of smuggling. In Bulgaria is

traditionally illegal cigarettes are of the same brands and lawfully, to be manufactured or imported or counterfeit cigarettes. In most countries, illegal cigarettes are unknown brands that come from Paraguay and China. To successfully introduce increased excise rates on cigarettes and to combat smuggling, the parliament voted to tighten trade regime with cigarettes, which will affect most commercial sites. Licenses for sale will be issued as before by customs. Monitoring will be performed again from them and the sale of cigarettes without excise label will be punished more severely. The sites will be required to register and VAT. Many stores after checks throughout the country closed Baja. Violators will be fined and outlets terminate their activity. Current market situation - economic crisis, competition and smuggling are the main problem areas. In comparison, revenues from sales in 2010 are equals approximately EUR 4 million less than in 2009.

P - Political factors - Water is an active policy for its reduction number of smokers. European Union has increased the excise duty as the primary measure to reduce tobacco consumption. It is a law, which restricts smoking in public places. Establishments should consider whether it will be more profitable as for smokers or nonsmokers. E - Economic factors - Increase of excise duty on tobacco products. In 2010 has increased the excise duty on cigarettes. In 2011 has increased the excise duty on tobacco. S - Social factors - increased tendency of society to lead a healthier lifestyle. Currently there is a growing demand for organic products. Demand for - high quality products, despite the - the high price also influences. The introduction of BS for food production and increasing demand for products "Old Mountain" is a step in confirming this thesis. Ever - most of the population turned to sports as a way of keeping a healthy lifestyle. This trend has a negative impact on the sale of tobacco products. Users avoid the use of products as they are at risk for their health. Their negative influence is increasingly aware public sentiment is to reduce smoking. T - Technological factors - Combine is equipped with new machines, with which AFP / actual factory price / goods to be reduced. This avoids too costly to enhance knowledge and compulsory duty. The final price does not change or be changed - a little. With the change of the process, reducing production costs. About 60% of the cigarette pack is an example of their duty.

6. Products and Services

"Smoky-Group" Ltd. is a company which is engaged in trading and distribution of cigarettes. The company has no manufacturing activity, but is supplied with finished products directly from the manufacturer. The product range includes all types of tobacco cigarettes, tobacco, filters, etc. The company is the sole official representative of Bulgartabac Holding for North-East Bulgaria (Shumen, Targovishte and Razgrad). This makes the company a dominant (leader). The organization affects the industry. By contract with Bulgartabac Holding company controlled distribution channels and prevent the entry of competitors.

What is in Cigarettes? See Appendix 1 People easily become addicted to cigarettes and smoking causes lung cancer, serious respiratory, heart problems, etc.. Dependence on smoking is defined as less dangerous than alcohol and marijuana. Manufacturers put warnings on the dangers of smoking and the content of harmful substances in cigarette smoke on the packaging of all products. Is regulated by law, what percentage of the package must contain warning.

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It is important to know what cigarettes contain: - Tobacco - a key component to which various additives are dosed to achieve the character of the blend. - Non-tobacco components - cigarette paper and filters are involved in the manufacture of cigarettes. In turn they also contain various chemical compounds that must meet the requirements of EU Directive 2001/37.

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Important for a distributor as "Smoky-group" Ltd is to conduct direct observations on the demand for cigarettes in the market. Bestselling brand in Bulgaria is currently "Victory Lights" according to "Bulgartabac" has 11.65% of the market of Bulgarian cigarettes. Next is "Victory blue with 7.31% of the market, the third and fourth are "Sredets Minima ', which holds 6.79 percent of sales. "Sredets superlayts has 5.65%. Ordered by last cigarette, the market looks like this: "Victory" - 26% "Sredets" - 21% "Melnik" - 11% "Prestige" - 7% "Faminny" - 7%. Like any company, and "Smoky-group" Ltd. has downturns in sales. This is a manifestation of weakness and address it is particularly important. The company has chosen various options to boost sales:

Stimulating - trial customers for sales to increase sales. Negotiations for the provision of bonus goods type lighters, cigarette cases, etc. Classification of outlets in speed, the goal is through this arrangement, to increase the statutory discounts to promote sales and thus increase market share.

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7. Marketing ,competitors
Competition in the tobacco industry is undoubtedly large. In Bulgaria, a leading model of indirect distribution - the company has one or more exclusive distributors, which sell their cigarettes, while wholesalers themselves or provide their own products to all retail outlets, or use this sub in different regions of the country. Against this background, more companies wholesale urge manufacturers to work with more brands to have greater opportunities to avoid the risk of default supply. Only one of the companies - Philip Morris (Marlboro), there is an exclusive distributor - "Kaven & Orbico" who can sell their cigarettes wholesale and retail. In other cases, manufacturers enter into contracts with several companies for wholesale. The most open policy is King `s Tobacco, working with all merchants as long as they want to buy their products. Marketing strategy is very aggressive competitors. In one of the Bulgarian music channels for almost a year now broadcast clips of songs, which repeatedly show particular brand of cigarettes, own the "Tobacco King".

According to the Commission for Protection of Competition such a direct and explicit advertising of cigarettes is expressly prohibited under Art. 35, paragraph 4 of TTPA.

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In the advertising of other brands of the same owners do use the term "promotional price". The price of tobacco products as a form of excise goods shall be determined by ordinance of the Council of Ministers and subject to change, so putting this sign creates a false impression in the consumer, that it is a discount and interpreted by the CPC as a deception, which mislead consumers. From the analysis of evidence collected in the file clearly was also found that the air on the TV music channel "TV Planet" by mid-2009 before broadcast clips of pop folk songs, in which overt or hidden way cigarettes are advertised process in absolute conflict with the statutory ban on advertising of such products. In the clips to the songs are different approaches used to focus the viewer in some of the artists themselves holding cans Merilyn or smoke cigarettes from them. Accordingly, there is an obvious and direct advertising of cigarettes expressly prohibited under Art. 35, paragraph 4 of the TTPA. The legislator has introduced strict restrictions on advertising of cigarettes and a ban on performance characteristics of the product quality. For this reason a misleading advertising attractive price gives unfair advantage of this market participant over its competitors. Source:http://www.regal.bg

Active advertising is the solution of competing manufacturers to increase the consumption of their products. This is especially true

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for Bulgarian cigarettes and tobacco plant. Active advertising is the solution of competing manufacturers to increase the consumption of their products. This is especially true for Bulgarian cigarettes and tobacco plant. Promotions in nightclubs, advertisements, billboards, and hidden advertising in music videos and movies like "Mission London". Behavior of competitors can be defined as aggressive. For the period 2008 - 2010, when the "Tobacco King" is separated from Bulgartabac Holding, managed to take about 20% market share at home and 30-40% of the market where the "Smoky-group" operates. Marketing strategy of competitors leads to success. Consumers respond actively advertising of competitors. Despite the low quality of products, prices are also slightly lower. Due to active advertising, research shows that increasingly it is prefered low quality goods. This is due to the fact that tobacco products are not essential. Increasing sells of Smoky-group Ltd.

Given the active promotion of competing firms, the company also takes strategy to promote sales. The film does not need explicit form of advertising billboards, banners, etc., because it "holds" the tobacco market in Shoumen, Razgrad and Targovishte. Instead, the company's sales representatives are stimulated with a monthly cash bonus added to the regulated basic salary. The top three sales representatives with - high turnover of products sold to certain brands, receive respectively:

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First - 500 BGN Second - 400 BGN Third - 300 BGN This strategy was undertaken in order to increase market share for certain products that the manufacturer wants to have MM, EVA, Victoria. Assessment and recommendations

Decision to increase the market share of products is a positive move. Recommendations for this area is related to the number of sales representatives paid a monthly bonus. If their number increased from three to five, it would stimulate more sales representatives. For quite a number of their - 24 in - motivating and encouraging encouragement would be at least the first five. Monetary incentives may also be replaced by non-those that meet the staff and reduce the company tax.

8. Suppliers
The main suppliers are Bulgartabac Holding Company and Philip Morris:

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Bulgartabac

Philip Morris Orders made without prior notice. The manufacturer requires a stock. Minimum that must be stored in a warehouse the quantities sold during the past five days plus 10%. At least twice a week to deliver the goods in warehouse Payment is made on the day of delivery, by bank transfer, according to a request sent

Tonnage and range - orders are made for each month, the request is made at the end of the previous period based on actual sales

At least twice a week to deliver the goods in warehouse Payment is made on the day of delivery, by bank transfer, according to a request sent On the basis of turnover from the previous period / one month / can be used interestfree loan stock within one month / this should determine exactly how many percent /

Without the suspension.

possibility

of

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In most cases, smoking shall be paid at the time of delivery. Minimum charge of one object is 10 cartons of cigarettes of a certain type. If the supplier often corresponds to the distributor, he can negotiate deferred payment or payment in one day a week. The basic discount from the price of a pack of cigarettes without VAT for retailers is 4-5%. It may increase if retailers order the whole range of a company and make greater speed. "Bulgartabac" is one of the leading cigarette manufacturers in Europe and leader of the cigarette market in Bulgaria. Holding cigarette factories have modern equipment and apply the most advanced technology for cigarette production and precise quality control. This enables us to offer a wide range of high quality brands, the latest requirements and trends in the global cigarette market. Source: http://www.bulgartabac.bg After four years of absence "Philip Morris" is back on the Bulgarian market with brands "Marlboro" and "Parliament", which can now be found commercially. "Philip Morris International" is an essential part of the "Altriya" (Altria Group) and is based in Lausanne. The company holds a share of 15 percent of the international cigarette market in 2005 its trademarks, including the leading "Marlboro", are sold in over 160 countries worldwide. They are manufactured in 50 factories, 35 of them have their own, the rest are licensed to

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manufacture.

In

2005

revenues

are

over

45

billion.

Source: http://www.dnevnik.bg

9. Management and Human Resources

Position Numbe r of hired Employ ees Qualification Main duties Rewards

owners who are also managers of the company

Higher economic education in management and marketing

Head stock

Least secondary education, computer literacy,

Cashier

Least secondary education, computer literacy, secondary or higher education in economics

Everything connected with the company management (recruitment, relationship with suppliers, work organization, etc.). They control the inventory, distribution of goods sales representatives, customer service Working with customers, processing of documentation of commercial and accounting of funds, communication with suppliers and banks Delivery of products in retail outlets, monitoring of how the arrangement of goods in shops, tracking the stocks managed by them in the vehicles

1,500lv +% of annual profit

Net pay 700 leva

Net pay 600 leva

Sales Representativ es

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Least secondary education, computer literacy, driving license category B, C

between 600 - 1000 euro salary, depending on sales

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Social activities for employees: - Insurance staff - as staff are paid 720 per worker each year - 300 BGN in June and the balance in December as a Christmas bonus. - Organization for People on the occasion of major national holidays - Christmas, Easter, St. George - Christmas gifts for children of employees - Team Building - ensure all staff and their families a free night, food and drinks in a three star hotel in the resort "Golden Sands" - Team Building - ensure all staff and their families a free night, food and drinks in a three star hotel in the resort "Kamchia" - Team Building - Soccer matches between staff of "Smoky-group" and other companies in the city of Shumen.

The existence of various social activities related to human resources management, leads to unity of the team and - more efficient staff. Despite the unstable environment, it is recommended not to reduce the cost of company personnel. Qualitative work cadres should be encouraged, promoted. "Smoky-group" should seek to preserve the integrity of its staff. The company can arrange summer internships for students wishing to implement in the field of trade. Suitable students from specialties like Trade Economics, Management, Commodities.

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10. Financial Forecast

Statement of revenue and expenditure of "Smokygroup" Ltd. in thousand
Content
Net revenues from sales other income expenses Costs of raw materials Staff costs Depreciation Allowances for impairment and provisions Other operating expenses Book value of assets sold Net financial income / expenses Profit / Loss before tax Cost / income tax Net profit / loss for the period Other comprehensive income and expenses

Year ended 31/12/2011

64018 4 242 209 430 72 143 61344 -197 1381 138 1247

Forecast for 2012

63000

240 195 430 70

1000

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Revaluation of financial assets available for sale Profit on revaluation of property Income tax expense on other comprehensive income and expenses Other comprehensive income after taxes and expenses Total comprehensive income for the year

64030

Balance for the year ended 31.12.2011 in thousand.

Content
assets
Non-current (fixed) assets Property, plant and equipment investment Property intangible Assets Long-term investments Investments in subsidiaries Investments in associates other investments long-term receivables Total fixed assets: inventories Receivables and Prepayments Cash and cash equivalents Total current assets: Total assets: equity Main / effectively paid / capital revaluation reserve 42 220 2879 6374 610 9863 10083 9000 220 220

Year ended 31/12/2011

Forecast for 2012

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reserves Net profit Total capital non-current liabilities Liabilities on trade credits Duty on bank loans Duty on leases Duty of employee benefits accrued provisions Deferred tax liabilities Other long term liabilities Total non-current liabilities current liabilities Current loans and overdrafts Commitment to suppliers and advances received Payables to employees Current tax liabilities accrued provisions other charges Total current liabilities Total equity and liabilities Contingent assets and liabilities

219 1247 1508

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75 1493 6976 28 2 1 8500 10083 28 9000

In 2012 wont be an increase in excise duty on cigarettes. However, the ban on smoking in public places is pending. Establishments will have to choose whether to have facilities for smokers, or smoking. The external environment has a major impact on the "Smoky-group" LTD. To continue its successful work, the company must prepare for changes in a rapidly changing dynamic environment. Reducing some

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of the costs and increase the reserves will lead to stabilization of the company. Costs for external services could be reduced. It is advisable to save on personnel costs, as this would lead to negative attitudes and mistrust of employees in the organization. After finding the net profit / loss is recommended to allocate at least 30-40% of its reserves by the company. Thus the company has no recourse to an increase in liabilities to banks and other financial institutions if necessary. Reserves would give priority to "Smoky-group" LTD. Outdated fleet, result in frequent recourse to the services and performing repairs. In 2011 three of the company's buses are replaced with new, purchased the lease. To reduce the cost of purchase is recommended at least four buses. The reduction will replace critical point of sales. Fuel costs are also high because the entire fleet uses diesel fuel. Recommendation is the replacement of such vehicles using fuels with - low prices. An example may indicate the replacement of buses using diesel fuel, such as using methane. Analyzing data for the period 2008 - 30.09.2010 can be concluded that there is a gradual decline in the carrying amounts. Estimates are that the trends in 2012 will be maintained. However, if timely measures are taken, the company can maintain the value of 2009. Planning can de foresee that profits of the company will have approximately one million leva, the value of assets and liabilities will be about nine million leva The expected net revenue from sales will amount to 63 million lv.

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To optimize profits can also consider opening several warehouses on the territory of which the company operates. Thus sales representatives will improve speed and reduce fuel costs. An example may indicate the opening of warehouses in Targovishte and Razgrad. Vehicles serving these regions, as well as necessary goods will be located on that territory. This will also lead to increased rental costs of premises, increased costs for wages and benefits for the guards to take care facilities, increasing the cost of equipment items. Therefore, this proposal does not imply guaranteed spending cuts by the company. To achieve this goal, we must first carry out calculations of the two options and to compare performance.

Repayment plan repayment of loans if any

11.

a scheme for

Today business is impossible without the use of permanent resources. As a result, many companies use bank loans. "Smokygroup" also uses this type of service. The company uses a single loan with maturity. This means that the repayment is done on a specified date. If prepaid or - later than the due date, penalties are imposed by the bank. Tobacco market is currently unstable. The reasons are both rising prices and the entry of new competitors. It is therefore difficult to predict with great precision and cash flow of the company. Therefore

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there is currently developing a project for a credit line. The company has high working capital, with whom - easy to service such loans. "Credit Line - suitable for customers who find it difficult to plan in advance the exact time, Dimensions of the amounts they need to in these terms and the amount of revenue and the precise time of receipt required to repay the obligations the credit." Source: http://www.tokudabank.bg

12.

Economic situation of the business plan

The company has no plans for future investments. According to her managers, she has a satisfactory market position, financial results are positive and do not currently have plans for expansion. Even with the establishment of the company purchased three new vehicles, so the lease.

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Appendix

Appendix 1 Effect of nicotine

Recent studies show that nicotine increases the levels of dopamine in the brain and e factor in smoking pleasure. Nicotine is the most addictive key element in the process of smoking. Another study

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shows that smokers more easily keep their attention and have better memory during fatigue than nonsmokers. In much of the smoke nicotine is pyrolizes, but even the presence of small amounts in the body can cause somatic and psychotropic effects, including nicotine dependence (nicotinism). This dependence is stronger than the dependence on caffeine or marijuana, but less than that of alcohol, also of cocaine, heroin and others. Acceptance of nicotine can lead to more rapid intoxication with alcohol or caffeine absorption or other recreational substances. According to Canadian Professor Jennifer O'Loflin most regular smokers develop nicotine dependence 5 months after initiation. Source: http://bg.wikipedia.org

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