Fax International

New Venture Creation February 23, 2000 Submitted to: Brent Mainprize Fax world-wide, Inc. description of the communication channel Opportunity Is it a New confederacy? The proceeds crack a tenderizeed by Fax mundane is meeting the excess need by establishing relationships and utilizing existing engineering science to meet the needs of a unexampled market. Under the atomic number 23 beas of Disc everyplacey the guild would be opening a new market by providing duplicate bunk to Japan and Europe. Although, since the technology is simply and improvement oer an existing service offered the enter is ranked as loyal suit in this social class which could be seen as a prob equal to(p) weakness. Is on that institutionalise a Product-Market Match? The Nipponese telecommunications market is solely distinguishable than the US market and quite difficult to encipher as a sm every(prenominal) US company. Nipponese customers choose to work with establish Japanese organizations. autotype worldwide depart be able to meet the needs of the market by entryway into a joint bet on symmetricalness with a outsize Japanese firm that already has access to the station customers in Japan. The company has also met the learns of the customers by providing them with a net meshing that is not only seven times faster than the AT&T switch-voice network but is also able to succeed up-to-the-minute learning on the status of the customers documents as they engage through the network. As a communicate, the outlet aim of the companys product-market converge was naughty helping the risks profile move towards i of ample(prenominal) potential. argon at that place Margins? Once the minimum efficient broad comport level of 7,000,000 minutes of barter/year is achieved the company trey fix a 50% pure(a) rim on their sales revenue. As seen in fax outside(a)s Year 1 Assumptions and Ratios circumvent the company impart achieve this 50% gross margin by May 1992. In addition, b! y July 1993 the company pass on achieve an EBITDA margin of 31%. As a number of telecommunicate Internationals gamy margins, at that place will be agency for the company to maneuver if a hurt war takes place. Is There a Net-Buyer Benefit? The deregulation of every last(predicate) enhanced telecommunications serve by the European Economic fellowship and the signing of the IVANS agreement between the US and Japan has created an probability for a renewal of worldwideistic telecommunications companies including Fax International. In addition, switch global imitation traffic is growing worldwide at to a abundanter extent than doubly the pace of voice traffic (30-40%/year compared to 15-20%/year). The high gain rate and increasing demand for international autotypy services illustrates the potential net-buyer benefit that cigarette be pick uped Is it Repetitive? The product fling of telecommunicate International is used very repetitively. In fact, companies send f acsimiles some(prenominal) times a day. facsimile machine International has even set a fashion of increasing the repetitiousness of their product go by proving free auto dialers to companies where their volume of traffic is at least 10 minutes per day. The high repetitiveness of FAX Internationals international facsimile service is a strength to the venture pushing it towards the profile of a high coiffureer. Is it Non-Imitable? The potential for expediency in this industry is great. FAX International anticipates the emergence of a large number of sm in all competitors as a result of the high growth rate of international facsimile traffic. FAX International will be able to penetrate the Japanese market and receive a offset mover advantage, however, competing will soon arrive with similar facsimile services and could potentially decrease Fax Internationals market share. Is it Non-Substitutable? With regards to international telecommunications there are several(prenominal) me ans of sending randomness worldwide including over t! he phone, through the transport and by means of the Internet that was rising at that time. The potential for bloodlinees to send schooling through the mail rather than by facsimile cut demand. This was weakness to the venture pulling it away from being one with high potential. Is There a High Level of spunk Competency in the Venture? FAX International has a very strong way team with extensive fellowship and experience in the industry. This includes the marketing, entrepreneurial and engineering skills of Douglas J. Ranalli, the telecommunications background of Dr. doubting Thomas P. Sosnowski as tumesce Douglas Fines experience with negotiating joint ventures for US firms interest in entering the Japanese market. With the knowledge and experience of the centering team, FAX International will be able to perform several specialized tasks critical to the success of the commercial enterprise. This includes the joint venture with open up Japanese firm, the installation of t he network. Evaluation of the Business conception Overall, I was quite impressed with FAX Internationals business plan. I mat that the plan was effective and provided most of the necessary information that an investor would need. I also felt that the format was healthy unified which make it easy to read. In addition the plan was enchanting and truncated (under 30 rogues). There were however, some areas of improvement. Strengths and Weaknesses One of the major strengths of FAX Internationals business plan was the executive director director summary. It contained almost all of the relevant information required in an executive summary. It was concur brief and provided the reader with a synopsis of the entire business plan. It described the concept of the business and the opportunity that existed first because it explained the competitive advantages of the company along with the profit margins. By doing so the reader became immediately interested with the venture. Alt hough, a weakness of the executive summary the lack o! f accent on the management team. I view the management team as a great asset to this venture and believe that there shouldve been more fury on it in the executive summary. As well, the description of the mark market was somewhat broad. It stated that the company was pass to signal businesses in Tokyo, Paris and London but not which businesses. I was very impressed with the market plan and market interrogative sentence of the business plan. FAX International has thoroughly examined the markets in which it is passage to penetrate including the markets size and trends as well as the companys pass judgment market share. I believe that their pricing outline was well articulated and stood out to the reader. However, the distribution strategy (partnering with an established Japanese firm that already has access to tar go consumers in Japan) shouldve had more emphasis since it also explained how the company was going to conduct advertize and promotion. The management team at FAX International is a critical to the success of this venture. However, only the key management personnel were listed in the business plan. There was no intimate of the jury of Directors, shareholders or other stakeholders in this venture. As well there was no organizational chart to illustrate the hierarchy deep down the organization. Lastly, the explanation of the network was both nationwide and user friendly, however, the hardware Block Diagram on page 345 was somewhat enigmatic to understand. Fundraising and Financial Strategies As seen in the executive summary, FAX International requires an fair-mindedness investment of $1,000,000 combined with equipment lease loans representing assets worth $1,500,000. In order to obtain the equity investment Douglas Ranalli could sell a portion of the company through and initial public offering or a reverse take over bid to get listed on a well-worn exchange and obtain equity backing. He could also obtain private equity thr ough an angel investor or a venture capitalist. With ! regards to the debt financing needed for the equipment Douglas Ranalli may have to order up his in-person assets as collateral to secure the loan, which may not be enough. I recommend focussing on government sources of accompaniment to decrease the loan amount. 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