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CONTENT PAGES
Malaysia signed?
10.0 How will Business Cushion the Impact of Economic Recession 12
and Crisis?
References 13
1.0 Highlight of the Product
Life Company will launch and offer a new product which is Water4Life. The Water4Life
with an Inhaler Adapter is supercharged with the USB which has lithium battery inside, it can use
10-20 times. Water4Life desires to give our customers the most efficient diatomic Hydrogen
health benefits in a portable device. At a touch of a button the enriched hydrogen that our bodies
need to fight free radicals, will start compressing the air become water until the bottle is full. Our
product can generate water from the humid air and clean air. Water4Life uses electrolysis to
generates 500-120ppb of water special sintered activated carbon. Water4Life able to produce a
bottle of hydrogen-rich water within 4- 10 minutes. Runs plugged into wall outlets or USB ports
in car or laptop and unplugged on the lithium battery that makes this super portable and gives
you over a dozen cycles before needing another charge.
Presently, people are taking more and more care about their health than ever before,
which is a very good thing. Hydrogen-rich water is a potent antioxidant. It can prevent oxidation
from inflicting damage on cells throughout our customer body, and it can repair cells that have
already been damaged by it, thus preventing them from becoming free radicals that steal
electrons away from their neighboring cells in the process of trying to repair themselves.
Drinking water produced by Water4Life can defend against the neurological damage of brain
injury, both the type that occurs during stroke and surgery and that which occurs over time due to
oxidative stress. Water4Life is also designed for it to be easily carried anywhere so our customers
can enjoy the best water all the time. Hence, our company made up one's mind and launched this
Water4Life to help people to live a healthy life.
People's body needs water to survive. Every cell, tissue, and organ in your body needs
water to work properly. For example, your body uses water to maintain its temperature, remove
waste, and lubricate your joints. Water is needed for overall good health. You should drink water
every day. Different people need different amounts of water to stay hydrated. However, the
reasonable goal to stay hydrated is to drink 6-8, 8-ounce glasses of water each day. To stay
hydrated and healthy yet you found difficulties to keep the bottle full of water always. Here you
can try out our products.
Our Water4Life target market is for both gender and 12 years old and above. As long as
you need water to stay hydrated except for those who live in a dry place. Examples of dry places
are Egypt, Peru, and Chile. This is because our product generates water from the humid air. To
make our product function well we have to sell it to the right customer who is living in a humid
place. Our product is at its reasonable price and it is also a part of the investment for body
health. If you are healthy you can be more productive in your life. You can even save future
costs to not consulting a doctor for body checking.
We will focus more on mount climbers or people who do sports to purchase our products.
This is because they are people who sweat the most. You need to keep hydrated when you losing
water from the body. When they are out of drinking water it is hard for them to find a water
refilling station. Especially mount climbers. Therefore our product brings convenience to your
life and can always keep you hydrated with an unlimited of drinking water.
The water that daily life we usually drink it plain and it is most healthy to keep our body
healthy and hydrated. Our product (Water4Life) which means of the hydrogen water bottle is
another choice for consumers who are more creative and environmentally friendly compared to
the traditional water bottle. It only fills the water bottle with hydrogen and the hydrogen will be
processed to become water. Hydrogen is a colorless, odorless, non-toxic gas that binds to other
elements like oxygen, nitrogen, and carbon to form various compounds, including table sugar
and water (Jillian Kubala, 2019). So, Hydrogen Water also a healthy choice for consumers. But,
there are still have some challenges that occur in the sales of Water4Life.
FVI−IVI
ROI= × 100
IVI
We assume that for the year 2020 our investor bought 1,000,000 shares of our company
shares for RM10 each. Exactly a year later, the investor sold the shares for RM12.50. You earned
dividends of RM1000 over the one-year holding period. The investor also spent a total of RM250
on trading commissions when investors bought and sold the shares. RM100 for when buying the
shares and RM150 when selling. In the year 2021, the price of shares remains RM10. Exactly a
year later, the investor sold the shares for RM13. The following year 2022, the price of shares
decrease to RM9.50. Exactly a year later, the investor sold the shares for RM12.
Table 1: The Rate of Return on Life’s Company Investment.
Year Return on Investment
2020 IVI =RM 10,000,000+ RM 100=RM 10,000,100
FVI=RM 12,500,000+ RM 1000−RM 150=RM 12,500,850
RM 12,500,850−RM 10,000,100
ROI= ×100=25 %
RM 10,000,100
2021 IVI=RM 10,000,000+ RM 100=RM 10,000,100
FVI=RM 13,000,000+ RM 1500−RM 150=RM 13,001,350
RM 13,001,350−RM 10,000,100
ROI= ×100=30 %
RM 10,000,100
2022 IVI =RM 9,500,000+ RM 100=RM 9,500,100
FVI=RM 12,000,000+ RM 1500−RM 150=RM 12,001,350
RM 12,001,350−RM 9,500,100
ROI= ×100=26.33 %
RM 9,500,100
Return on investment in 2020 is the lowest compared to the year 2021 and 2022. In 2020, the
return of investment is low due to the new launching of the product. However, in the year 2021,
our company product has been recognized by the consumers which make the investors have an
interest in investing our products. In 2022, the rate of return decreases due to the number of
competitors in the market is increasing.
Water4Life goals are selling our products world-wide and produce the best customer
service to our dear customers. Our company is seeking a substantial long-term business loan to
develop the Water4Life product. This funding will cover up operating expenses, manufacturing
cost and product development leading to the launch in August 2020.
500000
400000
Total Revenue
300000
Total Cost
200000 Fixed Cost
100000
0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
We plan to sell our product at the price of RM89.90 for one unit then we assume that we
have a variable cost per unit for RM52.50 and a fixed monthly cost for RM278,000. The targeted
unit to be sold for every month is increasing by 500 units. For example, For the first month of
launching, we assume that we had sold 500 units so we gain revenue for RM44,950 and the total
cost is RM234,250. We are having a big loss in January for the amount of RM189,300. As the
months pass by the amount of loss will be decreasing and stop at the break-even point which is
when total revenue meets total cost which is in November. Based on the break-even analysis we
assume that our company will be starting to earn a profit from December onwards.
New Look is in the early stage of development, thus initial projections have only been
made on accounts that are believed to most drive the income statement.
Graph 2: The yearly Gross Margin
4,000,000
3,500,000
3,000,000 Sales
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2020 2021 2022
Graph 3: The yearly Profit
Profit Yearly
3,000,000
2,500,000
2,000,000 Profit Yearly
1,500,000
1,000,000
500,000
0
2020 2021 2022
New Look is in the
early stage of development, thus initial projections have only been made on accounts that are
believed to most drive the income statement.
Table 2: The Pro Forma Profit and Loss
PRO FORMA PROFIT AND LOSS
2020 (RM) 2021(RM) 2022(RM)
Sales (15%) 2,000,000 3,400,000 3,910,000
Direct Cost of Sales (10%) 280,000 308,000 338,800
Gross Margin 1,720,000 3,092,000 3,571,200
Gross Margin % 86% 90.94% 91.34%
Expenses:
Payroll (10%) 360,000 396,000 435600
Sales and Marketing and Other Expenses 150,000 200,000 250,000
Depreciation 8,000 8,000 8,000
Client Relations 6,250 6,250 6,250
Rent 3,500 3,500 3,500
Payroll Taxes (13%) 46,800 51,480 56,628
Other 0 0 0
Total Operating Expenses 574550 665,230 759,978
Profit Before Interest and Taxes 1,145,450 2,426,770 2,811,222
EBITDA(10%) 25,000 27,500 30,250
Interest Expense 2,500 2,750 3,025
Taxes Incurred 2,000 3,000 4,000
Net Profit 1,115,950 2,393,520 2,773,947
Net Profit/Sales 55.80% 70.40% 70.94%
Local markets comprise of the customers that will buy a product or service in the local region
or area of where it was produced. The Life Company has come up with a few strategies to grow
our unique product at local markets as shown below.
International markets are markets beyond the international borders of the home country
of a business organization. The Life Company has also prepared a few strategies to dominate the
international markets as follows.
1. Understand the need for your products or services in the International Market.
To grow our product globally, our product needs to meet the demands of the proposed
market. We shouldn't rely on the fact that if our business is doing well in a local market, it will
also do well in the international market. The demands in the local and international markets can
be different. Due to the difference in demand of the local and international markets, we may have
to innovate our products to meet the needs of the international markets.
We have two strategies to be used for marketing at the domestic and international
markets through social media and advertising. These two will be the main strategies for us to
make our product to be well known and attract more customers.
Social media statistics from 2019 show that there are 3.2 billion social media users
worldwide which equates to about 42% of the population (Emarsys, 2019). It is a channel that
easy to do the process of communication easily between two parties or more. Applications such
as Facebook and Instagram are most popular among social media users. There is 2,414 million of
active users using Facebook and ranked the first one in the global social network 2019.
However, Instagram ranked the sixth in the global social networks 2019 which is 1,000 million
users (J. Clement 2019). This is because these applications contain a special feature that attracts
them to use it. When our company uses social media for marketing strategy, it helps us can direct
communication between the company and the customer. This situation can help our company
build a good brand image on the consumer's mind through direct communication. For example,
when the consumer comment and ask any questions about our product on the company's
Instagram and Facebook post, we can directly answer by comment it through these platforms.
The consumer will have a good impression of our company. Some consumers will become our
brand's fans if we provide our good services to them which is a reply to them soon. Then,
building brand loyalty among them which is our target can achieve. They will actively
participate in our product if they are our brand loyalty consumers.
8.2 Advertising
Advertising is one of the marketing strategies that reach and persuade customers to buy
the products or services from the company. Advertisement is an attempt at creativity which
affects the consumer's motive to buy a particular product and change or make the perception of
the production in the mind of the consumers. It is a long-term investment for the company. This
strategy will stimulate the demand of the customers and wake up their potential needs for our
products. The advertising plays an important role in enhancing the sales volume of the brand.
Researchers found that repetition in the advertisement hit the mind of the customers which also
help them to remember that product and purchase repeatedly (Pope, 2009).
9.0 How can your business take advantage of trade agreements that Malaysia signed?
A Free Trade Agreement (FTA) is an international agreement between two or more
countries to reduce or remove trade barriers and bring closer economic integration. For example,
Malaysia has 7 bilateral trade agreements with Australia, Chile, India, Japan, New Zealand,
Pakistan, and Turkey beside that the Association of Southeast Asian Nations (ASEAN) members
have established the ASEAN Free Trade Area. The ASEAN Free Trade Area (AFTA) is a trade
agreement to support local manufacturing in all ASEAN countries.
This agreement will help increase the production of our company by spurring us to
innovate and develop a better product. International trade increases a company's market share.
This causes lower costs and increased productivity, leading to higher rates of production. FTAs
also open markets and offer business incentives and protections. They include commitments to
protect intellectual property rights and open regions to the competition. Besides that, FTAs can
help our company to liberalize and improve market access to multiple countries, boost the trade
facilitation and foreign investment at the same time.
Tariff elimination was effective on 1 January 2010 with Malaysia and five other ASEAN
Member States (which are Brunei Darussalam, Indonesia, the Philippines, Singapore, and
Thailand) is a complete free trade area. These countries have eliminated import duties on 99
percent of products in the Inclusion List (except for products listed in the Sensitive and Highly
Sensitive Lists). This is one of the agreements that will help our company to be more competitive
in the global market. That is also the same for the Common Effective Preferential Tariff (CEPT)
Scheme.
10.0 How will your business cushion the impact of economic recession and crisis?
We will be reducing our cost by using inventory management practice such as categorize
our inventory using ABC analysis, Optimize our pick and pack process to fulfill customer order
efficiently and we will also be optimizing our turnover rate by calculating our rate of inventory
turnover so we will have a better grasp on the market demand for our products, on the amount of
obsolete stock we may be carrying, and what steps we need to take to sell or stock more
inventory. This will help us save unnecessary costs because of inefficiency.
Besides that, we will develop and implement a more effective strategy to win the competition's
customers. Our medium-size business is going to have a hard time during the recession so that
why we need to continuously expand our client base and that means drawing in customers from
the competition. We will be drawing our customers by using our innovative design and we will
continuously observe and researching our competitor and see what we can offer to entice their
customers into becoming our customers. We will also try our best by providing the best customer
service by delivering tangible and intangible performance to our customers and so that we could
to satisfy our customer needs and request. We will also be increasing our marketing budget and
will increase the exposure of our product in the hope of increasing our sales. Other than that, we
are thinking of funding charity and environmental to increase our reputation, preserve our
ecosystem and contributing back to our society, hitting three birds with one stone.
Our company will also protect our cash flow of business during the recession. Cash flow
is the lifeblood of our business, so to keep our business in good condition, cash needs to
continually flow through. A business should have cash flow no matter how tough the time is. We
will be improving our cash flow by preparing monthly cash budgets to keep track of our cash.
Statements of cash flows can be done at regular intervals to analyze our cash flow. This will help
us to budget the amount of cash we can use for the various activities in our business. We will
also be using the cash flow management tool to aid us in manage, track, and forecast our cash
flow.
We will also be taking good care of our team because if you look after your team, your team
will look after you. During the recession, lay off employee is a common move made by a
company to reduce the labor cost. However, doing this will make us lose our valuable skilled
employees.
References
Jillian Kubala. (January 16, 2019). Hydrogen Water: Miracle Drink or Overhyped Myth?.
Healthline. Retrieved from https://www.healthline.com/nutrition/hydrogen-water