strategic plan for how Jacobs Recycling Limited will enter the market as well as sales and profits projections for the next 12 years
Executive Summary
Plastic waste is a big problem in the United States as only a small percentage of plastic waste is recycled. Jacobs Recycling Limited is a business venture which will focus on recycling plastic then transforming it into goods for personal and industrial use. This paper will provide a strategic plan for how the organization will enter the market as well as sales and profits projections for the next 12 years. The organization will operate under a sustainable business model which will focus on the growth and expansion of Jacobs Recycling Limited product’s range. The main objective of Jacobs Recycling Limited is to produce recycled plastic products using recycling and manufacturing processes that are cost-effective and environmentally friendly.
Assignment
Management team expertise
Entrepreneurs play a critical role in businesses as they are responsible for turning an idea into a functional and profitable business operation. Setting up a business is a risky venture due to the multiple external and internal factors that influence the success of an organization in the market. An important skill that entrepreneurs and business managers must have is good leadership skills as employees play a critical role in the daily operations of a business and they have to be highly productive. Transformation leadership is a theory that business leaders can apply to increase the effectiveness of their workforce. The theory’s main principle is that management should empower employees by giving them a greater role in the decision-making process, allowing employees to work with a greater levesl of autonomy and respecting or acknowledging their opinions and personal needs of employees (McCleskey, 2014). Entrepreneurs and business managers must also possess good problem-solving skills as firms will always face new challenges or changes to market conditions which they must adapt to, to remain competitive. In addition, communication and relationship build are also important skills for entrepreneurs and managers as they must work and maintain strong relationships with business partners such as distributors. Don't use plagiarised sources.Get your custom essay just from $11/page
The concept
The business venture will be called Jacobs Recycling Limited and will focus on recycling plastic then transforming it into goods for personal and industrial use. The growing demand for recycled plastic resins and products coupled with the increase in the supply of waste plastic provides Jacobs Recycling Limited with an excellent business opportunity. Plastic waste is an abundant resource which adversely affects the environment. It takes plastic a long time for plastic for it to fully decompose in landfills which raise the need to recycle this material, however, the U.S. Environmental Protection Agency (EPA) indicated that the United States only recycled 87 million tons out of the 251 tons it produced in 2012 (Rochman et al., 2013). China stopped the import and recycling of waste from the United States in 2018 which will result in the sharp increase in plastic waste in the near future. One of the main advantages of this business venture is its financial feasibility since the main raw materials which is waste plastic is free and there are government incentives for recycling such as tax breaks. The organization will not solely recycle plastic waste like tradition recycling firms as it will also adopt a forward integration strategy. The forward integration strategy will involve processing the recycled plastic into finished goods which will then be directly distributed through the supply chain that will be created by the firm. The additional value created by manufacturing the recycled plastic will provide the firm with a competitive advantage over competitors as well as an additional source of revenue.
Methodology
Jacobs Recycling Limited will operate under a sustainable business model. The main characteristics of a sustainable business model is that it must be commercially successful and viable in the long run. A sustainable business model must also be in line with society’s environmental and sustainability goals such as reducing and recycling waste. Another important factor that determines whether a business model is sustainable is primarily down to the model’s compatibility with the external environment and the competitive nature of the organization’s market. The business model which Jacobs Recycling Limited will adopt is constant product diversification and expansion as this is also in line with the organization’s business concept and will ensure that the firm’s growth is sustainable. Jacobs Recycling Limited will begin its operations with four main product categories namely construction and landscaping products, packaging products and clothing material. The waste plastic will be collected from different sources such as rivers polluted with plastic or landfills. The next process will involve identifying and separating the different types of plastic waste as the organization’s products will only require four types of plastics namely polypropylene, polyvinyl chloride, low-density polyethylene and polyethylene terephthalate. The waste plastic which will not be used by the firm will be transported to other recycling firms after the sorting process. The waste plastic will then be recycled into plastic resign which will then be processed to make the company’s products. The next stage will see Jacobs Recycling Limited’s products travel down its supply chain and distribution network. As such, this will include processes such as packaging, transportation, and storage in warehouses.
Objectives
The main objective of Jacobs Recycling Limited is to produce recycled plastic products using recycling and manufacturing processes that are cost-effective and environmentally friendly. Other objectives of the firm are
- For the business to grow annually and constantly increase its number of products in the market
- To produce high-quality products for clients
- To develop the skills and capabilities of the organization’s human capital to aid in the growth of the organization
- To reduce plastic waste in the environment
Market
Identifying the market for Jacobs Recycling Limited ‘s products will be through market segmentation. Market segmentation can be defined as the process by which the market for an organization’s good and services is divided into segments which are based on factors such as gender or personal preferences. Market segmentation allows a firm to focuses it funds, strategy, resources, and activities such as advertising onto more specific market segments (Cross et al., 2015). Consequentially, this concentration of force by an organization results in a competitive advantage over rivals. The market segments which Jacobs Recycling Limited will target will be according to the needs of its clients. The organization will sell finished goods to consumers and raw materials to business which they will then manufacture into finished goods. In the case of finished goods, Jacobs Recycling Limited will provide both building materials and landscaping products. Jacobs Recycling Limited will sell packaging items and clothing materials in the form of polyester fibers to companies which will use them in their production process. The market segment for finished goods will consist of homeowners and interior designers while the segment for raw materials segments will be clothing manufactures.
Competition
Jacobs Recycling Limited does not face a direct threat from competitors due to the fact that many recycling companies either produce recycled plastic as their final product or they specialized in the production of a specific product that is made from recycled plastic. However, the organization faces an indirect threat from more established recycling firms who may gain a competitive advantage from intrinsic factors such as economies of scale or through adopting new recycling technology or production processes. The largest firms that are a direct threat to Jacobs Recycling Limited are listed below including the amount of plastic they recycle.
The product
Jacobs Recycling Limited’s sustainable business concept will primarily focus on constantly expanding and diversifying the organization’s products. Initially, the firm will offer only three main product categories. However, in the near future, the organization will aim to increase its product range by increasing the number of plastics that the firm recycles. The new plastics products will be produced from recycled plastic resin pellets which will also be sold to other firms as raw materials. Jacobs Recycling Limited will increase its final products range to include goods such as beverage bottles, medicine jars, and disposable drinking cups.
Table 1: Jacobs Recycling Limited Products
| Product Type | Plastic Resin Code | Plastic Name | Company Products |
| Landscaping | 5 PP | Polypropylene | Shovels, watering cans |
| Construction | 3 PVC | Polyvinyl chloride | Floor Tiles, Pipes, |
| Packaging | 4 LDPE | Low-density Polyethylene | Plastic Wrapping and Grocery Bags |
| Clothing Material | 1 PET | Polyethylene terephthalate | Polyester Fabric |
Marketing the business
The firm will employ a multi-pronged approach to its marketing strategy as it will use a wide range of advertising methods and media to reach a wider audience and to make the brand more recognizable. The primary advertising media will be the internet and the firm will advertise on different types of websites such as social media sites. The advertising campaign will primarily target the firm’s market segments and an example is that billboards will be placed in strategic locations where individuals that buy landscaping or construction material are likely to see like near hardware stores. The organization’s marketing campaign will also include adverts in newspapers and magazines, television commercials and the sponsoring of entertainment or sporting events. The company will also brand all its vehicles to increase the effectiveness of its marketing campaign.
Sales and operations
The firms main pricing strategy will be loss leadership as the firm will aim to provide the lowest prices for recycled plastic products in the market while maintaining high levels of quality. The expected results from the use of the loss leadership pricing strategy is that the firm will be projected to have an annual growth in sales of at least 30%. The firm’s operations will encompass the transportation of waste plastic from landfills to the organization’s facilities where they will be sorted, recycled into plastic pallets which will then be manufactured into the organization’s products. Jacobs Recycling Limited will have to meet human capital, infrastructure, administrative and capital requirements to make its operations possible. The firm will have to raise capital to allow it to rent a factory. Additional expenses will include office space, machinery, and transport vehicles. The administrative requirement which will make the operations of Jacobs Recycling Limited possible is the training and development of employees. The organization will require 30 staff members at its launch and this will include staff such as the managing directors and the CEO and employees such as divers, cleaners and machine operators.
Sales forecast
The strategic business plan for Jacobs Recycling Limited predicts that sales will grow annually by approximately 30%. The predicted growth in sales will be driven partly due to factors such as the increase in the demand of recycled products and raw materials. The recycling industry in the United States has also witnessed positive growth in the last decade and this growth is expected to continue in the future. The sales forecast for Jacobs Recycling Limited will also include the new raw materials and products that will be introduced to the organization’s product range in the future. The forecast and will stretch over a 12-year period.
| Unit Sales | YEAR 1 | YEAR 3 | YEAR 6 | YEAR 9 | YEAR 12 |
| Shovels | 100,000 | 150,000 | 200,000 | 300,000 | 400,000 |
| Watering cans | 50,000 | 50,000 | 100,000 | 150,000 | 150,000 |
| Floor tiles | 220,000 | 300,000 | 350,000 | 370,000 | 400,000 |
| Pipes | 167,000 | 150,000 | 170,000 | 200,000 | 250,000 |
| Packaging material | 450,000 | 455,000 | 500,000 | 500,000 | 600,000 |
| Polyester Fabric | 220,000 | 275,000 | 300,000 | 350,000 | 350,000 |
| Plastic Resin | – | 70,000 | 100,000 | 150,000 | 200,000 |
| Bottles | – | – | – | 60,000 | 100,000 |
| Bags | – | – | – | – | 60,000 |
| Plastic Furniture | – | – | – | – | 50,000 |
| Total | 1,207,000 | 1,450,000 | 1,720,000 | 2,080,00 | 2,560,000 |
| Total Unit Cost | (300,000) | (275,000) | (300,000) | (300,000) | (300,000) |
| Net Sales | 907,000 | 1,175,000 | 1,420,000 | 1,780,000 | 2,260,000 |
Holding all other external variables constant such as the economic performance of the United States, the firm is going to experience positive growth in the next 12 years.
Financial projections
The financial projections for Jacobs Recycling Limited will be analyzed using a simple accounting profit and loss method which will cover a 12-year period.
| YEAR 1 | YEAR 3 | YEAR 6 | YEAR 9 | YEAR 12 | |
| Sales | 5,000,000 | 5,300,000 | 5,650,000 | 6,070,000 | 6,350,000 |
| Direct costs | 400,000 | 350,000 | 400,000 | 400,000 | 400,000 |
| Shortage | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 |
| Packaging | 700,000 | 850,000 | 850,000 | 870,00 | 850,000 |
| Total cost of sale | 1,200,000 | 1,300,000 | 1,350,000 | 1,370,000 | 1,350,000 |
| Gross margin | 3,800,000 | 4,000,000 | 4,300,000 | 4,700,000 | 5,000,000 |
| Operating expenses | |||||
| Marketing expenses | 50,000 | 70,000 | 80,000 | 75,000 | 75,000 |
| General expenses | |||||
| Salaries | 300,000 | 400,000 | 450,000 | 450,000 | 500,000 |
| Rent | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 |
| Utilities | 40,000 | 50,000 | 50,000 | 70,000 | 70,000 |
| Insurance | 30,000 | 30,000 | 30,000 | 45,000 | 45,000 |
| Administrative expenses | 40,000 | 60,000 | 60,000 | 75,000 | 75,000 |
| Total general expenses | 510,000 | 640,000 | 690,000 | 740,000 | 790,000 |
| Total operating expenses | 560,000 | 710,000 | 770,000 | 815,000 | 865,000 |
| Profit before tax | 3240000 | 3290000 | 3,530,000 | 3885000 | 4135000 |
| Interest | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 |
| Total Taxes | 40% | 40% | 40% | 40% | 40% |
| Less government tax breaks | (10%) | (10%) | (10%) | (10%) | (10%) |
| Net Profit | 2238000 | 2273000 | 2441000 | 2689500 | 2864500 |
The firm is projected to make a gross profit of 5 million dollars and a net profit of approximately 2.8 million dollars by its 12th year of operation. The firm is expected to experience positive growth in profitability in the next twelve years. The profit the firm will make during this period will allow it to meet its debt repayment obligations.
Figure 1 Jacobs Recycling Limited’s Net and Gross Profit in dollars
Strengths and risks of the business
One of the strengths that the business has is that the global demand for recycled products is growing as consumers are increasingly becoming aware of the importance of sustainable consumption and the important role recycling plays in conserving the environment. Manufacturing companies are also switching to recycled raw materials due to their low cost. Recycling firms also receive a lot of support from the government through different programs and initiatives which are fully funded by the government.
The biggest risk to Jacobs Recycling Limited is an economic downturn or a recession. The market conditions under a recession such as high unemployment rates and a reduction in purchasing power will adversely affect the profitability and growth of the organization. Another risk to that Jacobs Recycling Limited faces is that since it is a new company in the recycling industry it may take a long time for its products to gain market acceptance hindering its ability to attract profile clients. The main reason for this is due to the fact that the recycling industry is highly competitive and already established firms have already saturated the market with their goods and services. A problem that the also business faces is the high entry costs such as the considerable amount of funds and resources that it would require to promote and advertise the organization’s products for it to meet its sales targets. Another risk that the business faces is that a sudden change in trends and consumer preferences. As such, the firm may not be able to adapt its production processes to create the new plastic products that consumers demand. Recycling plants require a substantial amount of initial investment and the firm will have to borrow this money from private lending institutions. Jacobs Recycling Limited’s inability to pay off this loan due to poor financial performance may result in the auctioning of its assets by the lending institution.
Closing summary
In conclusion, Jacobs Recycling Limited’s business plan to recycle and manufacture good for personal and industrial use from waste plastic is a viable and sustainable business idea. The growth of of the recycling industry coupled with the increase in the demand for both industrial and consumer products made from recycled plastic will ensure that the firm remains profitable in the future. The main objectives of the firm will be to produce cost-effective, environmentally friendly and high-quality products for its clients. The market segments for Jacobs Recycling Limited’s product will include both retail and industrial consumers. There are also threats associated with the recycling business such as changes in consumer preferences which require Jacobs Recycling Limited to be highly flexible when it comes to market changes. The firm will advertise its products using different advertising methods and media. Jacobs Recycling Limited is projected to enjoy both positive sales and profitability in the next 12 years.
Work Cited
CROSS, J. C., BELICH, T. J. & RUDELIUS, W. How marketing managers use market segmentation: An exploratory study. Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference, 2015. Springer, 531-536.
MCCLESKEY, J. A. 2014. Situational, transformational, and transactional leadership and leadership development. Journal of Business Studies Quarterly, 5, 117.
ROCHMAN, C. M., BROWNE, M. A., HALPERN, B. S., HENTSCHEL, B. T., HOH, E., KARAPANAGIOTI, H. K., RIOS-MENDOZA, L. M., TAKADA, H., TEH, S. & THOMPSON, R. C. 2013. Policy: Classify plastic waste as hazardous. Nature, 494, 169.