Business plan for a possible investment in Chile from Sony's Corporation by Cécilia Cosnard des Closets & Jean Lemercier. This report discusses the interest Sony could have in selling/manufacturing its IJ1000IM Energy storage module in Chile, a country facing daunting energy challenges.

1. Business Plan :
Sony in Chile
DOING BUSINESS IN SOUTH
AMERICA
Jean LEMERCIER
Cécilia COSNARD DES CLOSETS
08/06/2012

2. - 1 -
TABLE OF CONTENTS
EXECUTIVE SUMMARY............................................................................................ - 2 -
INTRODUCTION: WHY INVEST IN CHILE .............................................................. - 3 -
 A region facing daunting energy challenges......................................................... - 3 -
 A stable and dynamic business context ................................................................ - 4 -
 A country with high energy efficiency potential ................................................... - 5 -
THE COMPANY & PRODUCT .................................................................................. - 6 -
 The company ............................................................................................................. - 6 -
 The Product................................................................................................................ - 6 -
MANAGEMENT TEAM .............................................................................................. - 9 -
MARKET AND COMPETITION................................................................................- 10 -
 The Consumer Electronics Market.........................................................................- 10 -
 Competition...............................................................................................................- 10 -
MARKETING AND SALES.......................................................................................- 12 -
 The marketing plan ..................................................................................................- 12 -
 Key distribution partners ........................................................................................- 12 -
 Pricing strategy ........................................................................................................- 13 -
BUSINESS SYSTEM & ORGANIZATION ...............................................................- 14 -
 The partnership with Tresfa Electricidad..............................................................- 15 -
 Hiring Plan.................................................................................................................- 15 -
IMPLEMENTATION SCHEDULE.............................................................................- 17 -
 Schedule....................................................................................................................- 17 -
 Responsibilities........................................................................................................- 17 -
 Milestones.................................................................................................................- 18 -
FINANCE ...................................................................................................................- 19 -
 Assumptions.............................................................................................................- 19 -
 Financial Performance Analysis ............................................................................- 21 -

3. - 2 -
EXECUTIVE SUMMARY
This proposal outlines the processes for Sony’s implementation of the IJ100IM
Energy Storage Module on the Chilean market. Sony is a leading electronic devices
manufacturer benefiting from an international reputation for making high quality and
advanced products. The corporation recently launched the production of its energy
storage module, a device that reduces electricity consumption, stores energy and
represents a back-up power resource for businesses and residential homes. The
consumer electronics market and energy efficiency market in Chile have proven to be
very attractive for businesses in the past few years, as the Chilean political stability
and economic growth have considerably improved, key elements that drove Sony to
open a subsidiary. In order to succeed when producing the module, Sony has
created a new management team, made of 2 managers, 10 plant workers and 15
salesmen that will advertise the product in Chile. Although competing products do
exist on the market, we believe our energy storage module will make a difference and
is unique as it targets households and is powered by olivine-type lithium-ion iron
phosphate cells. 2 different marketing strategies have been identified to reach as
many customers as possible; we plan on penetrating the market with the help of our
3 partners, namely ABCDin and WEI to reach out for households on the consumer
electronics market and Tresfa to help businesses concerning maintenance and
installation issues, along with establishing a presence on the energy efficiency
market. As previously mentioned, we plan on creating the Sony Chile Ltd subsidiary,
which the Sony Corporation will have full control on. Our hiring plan consists of
favoring the local active population as to reduce unemployment; the hiring process
will disregard ethnicity or origins and will be based on background experience. Our
implementation schedule describes our actions for the next 3 years to come, with the
ultimate goal of expanding our operations to the neighboring countries, along with
making this project profitable. Our first objective is to increase our sales by 20% in
addition to having good press coverage and reputation of our business activities.
Finally after taking into account all the possible expenses we will encounter, our
financial calculations show that we will be able to recover our initial investment before
the end of 2015, meaning that our investment is safe. We expect profit to be relatively
high with a net income over 1 million euro in 2017 and 2018: this is why we believe
that our project is financially viable and could deliver high value for any stakeholders
who will participate.

4. - 3 -
INTRODUCTION: WHY INVEST IN CHILE
 A region facing daunting energy challenges
When considering investing in the energy efficiency industry, South America
appeared swiftly as a very promising area. In spite of its natural resources wealth
(fossil fuels, minerals such as iron ore, bauxite, tin...), it is facing a hefty energy
challenge. With an ever-increasing crude price and a robust economic growth,
meeting the demand for electricity in Latin America will be harder over the coming
decades. It is estimated that approximately $600 billion would need to be invested in
the electricity sector between now and 2030 for the energy demand to be met
(Economic Commission for Latin America and the Caribbean)i
. However, it is
important to grasp that alternative energy is soaring in Latin America (mainly wind,
solar and hydro powers)ii
and more than 183 Gigawatts of new power generation
units are under consideration in Latin Americaiii
. Despite those efforts in increasing
electricity generation capacity, many South American countries such as Venezuela,
Brazil, Chile and Ecuador faced electricity shortfalls in the past few years. In fact,
electricity is mainly produced through Hydropower and therefore the droughts of the
last few years triggered electricity cuts and forced many governments to rationalize
its use.
After considering all these elements, South America emerged as a very
interesting region to invest in. However, it is not very realistic to expect that we will
be able to enter all these South American economies at the same time, thus we had
to decide of a country which would act as an anchor point in the continent. We finally
decided to invest in Chile, since it is one of the countries that is the most affected by
power blackouts. To address this issue, the government of Chile started in December
2011 a campaign called “En verano, quitate la corbata”iv
(In summer, take off your

5. - 4 -
tie) in order to save electricity. The government is willing to set up further energy
efficiency measures, and now even the Chilean small and medium enterprises are
striving to trim their energy bill. In this purpose, Chile implemented a program
supported by the Inter-American Development Bank to facilitate the connection
between these companies and consulting firms specialized on energy usage.
Besides, the IDB will lend money to the Chilean Energy Efficiency Agency ($2.6
million) which will be used to provide training to energy efficiency consulting firms.
The new energy strategy initiated by president Piñera aims to ease the national
energy demand up to 12% by 2020v
. It is our belief that this urge for energy savings
is very likely to be favorable to our investment as we could benefit from the
government approval and possibly grants.
 A stable and dynamic business context
Another element not to neglect is the relatively safe investment environment in
Chile compared to others South American economies. According to the three most
famous grading agencies (Standard & Poor’s, Fitch and Moody’s) Chile is the country
with the lowest risk in Latin America, with grades ranging from A+ to AAA. The 2012
Index of Economic Freedom developed by The Heritage Foundationvi
ranked Chile as
the 7th
“most free country” on a business standpoint in the world and denoted “a
transparent and stable business climate”. On average, taxes, trade barriers and
government intervention in the business area are quite low as well as inflationary
pressures, and contractual agreements are secure.
Country/Indexes CPI
(Corruption
Perception
Index) 10 = No
corruption 0 =
Very
corrupted
Ease of doing
business rank
GDP growth
2011 (CIA
world
factbook)
Inflation 2011
(CIA world
factbook)
Brazil 3.8 126th
+2.7% +6.5%
Argentina 3 113th
+8% +22%
Peru 3.4 41th +6.9% +3.4%
Chile 7.2 39th
+6.5% +3.3%
Based on international rankings, Chile is the most interesting country to invest in
since it is a good compromise of economic growth, transparency, and stability.

6. - 5 -
 A country with high energy efficiency potential
Apart from the country’s overall economic stability, its strong orientation towards
the mining industry leaves good prospects for energy efficiency companies. In fact, a
study by the “Programa de Estudios e Investigaciones en Energia” revealed that
about 20% of the country’s global electricity demand could be saved by 2021 (chart
below). Although we have to take into account the fact that Chile is a reasonably
small market (17 million people), we believe that a sound strategy could enable us to
be successful in niche markets.
Source: PRIEN (2008)

7. - 6 -
THE COMPANY & PRODUCT
 The company
Established in Japan on May 7th
1946 by Mr. Ibuka, Sony Corporations is a
leading consumer electronics manufacturer operating worldwide (offices on every
continent), its headquarters based in Tokyo. With the lead of Howard Stringer
(chairman) and Kazuo Hirai (CEO), Sony performs a wide range of activities, namely
digital imaging, electronic components, telephones, televisions, audio and video
devices, computer and computer devices as well as games. These activities are
divided in several branches such as the Sony Picture Entertainment, Sony Music
Entertainment, Sony Computer Entertainment, Sony Electronics, Sony Network
Entertainment, Sony Mobile Communication to name but a few. Some company
figures: Sony hires 168,200 people worldwide, runs more than 1,200 subsidiaries and
its shares are exchanged on the New York Stock Exchange at $13.59 per share
under the ticket “SNE” (June 6th
2012); in 2011, the company achieved $80.5 billion
net sales1
.
Sony strives to provide the best quality electronic devices and is constantly on
the lookout for innovations, improvements and designing products with style: all these
features make the enterprise a leading and dominant actor on the consumer
electronics market, which is proven by its mission statement: “To experience the joy
of advancing and applying technology for the benefit of the public”. Their strategy to
“emotionally touch and excite their customers” drives the Japanese conglomerate to
invest a lot in Research and Development while maintaining market leadership.
Sony’s rich product and service portfolio allows the company to strengthen its
position on the market and ensure profits. The television product range and branch is
the one generating most revenue (35%): in fact, Sony brought the television sphere
to a new level by introducing an innovation such as the LCD flat screen television,
showing it is always improving its products with a higher quality. Games represent
the company’s second largest revenue-generating unit with products such as the
Play Station and the Play Station Portable2
.
 The Product
In April 2011, Sony launched the IJ1000IM Energy
Storage Module on the Japanese market. The energy
storage module is a chargeable appliance that stores
energy thanks to its olivine-type lithium-ion iron
phosphate cells: these are rechargeable batteries that
1
"LexisNexis® Academic & Library Solutions." LexisNexis® Academic & Library Solutions. 22 May 2012. Web. 06
June 2012. <http://www.lexisnexis.com/hottopics/lnacademic/>.
2
"Sony Corporation." Login. 22 May 2012. Web. 06 June 2012.
<http://subscriber.hoovers.com/H/company360/fulldescription.html?companyId=41885000000000>.

8. - 7 -
have a 10 year lifespan, ensure safety, have a smaller impact on environment (the
batteries do not include cobalt or any other rare metal that are dangerous for the
environment) and their capacity does not decline under humidity, temperature,
storage and over charging. The batteries boast excellent energy efficiency, high
power density and most importantly ensure a superior energy storage capacity.
Below is a chart demonstrating the performance of lithium-ion batteries3
:
The IJ100IM Energy storage module has a 1.2 kWh capacity and many other
components can be connected to it. It can be used for several purposes, the main
one being to load-level the energy (load-leveling is a method that reduces the
fluctuations that occur in electricity demand by storing excess electricity in periods of
low demand to use it during periods of high demand), thus reducing energy
consumption. It is also employed as a back-up power source in case of unplanned
events as the energy is being stored and can be used during an electricity outage4
.
There are numerous advantages when utilizing the module. 5 important ones
have been identified:
 It’s life-long span (about 10 years), if the device is charged once a day,
thanks to the olivine-type lithium-ion iron phosphate cells and their
advanced properties. Furthermore, in comparison with commonly used
batteries such as cadmium (Ni-Cad) batteries, lithium-ion batteries do not
demonstrate any “memory effect” (a phenomenon that occurs when a
3
"Sony Global - Sony and the Environment - Products - Energy Storage Module IJ1001M."Sony Global - Sony and the
Environment - Products - Energy Storage Module IJ1001M. N.p., 2012. Web. 08 June 2012.
<http://www.sony.net/SonyInfo/csr/SonyEnvironment/products/lineup/IJ1001M.html>.
4
"Green Car Congress: Sony to Ship 1.2 KWh Energy Storage Modules Using Rechargeable Li-ion Batteries Made from
Olivine-type Phosphate." Green Car Congress: Sony to Ship 1.2 KWh Energy Storage Modules Using Rechargeable Li-ion
Batteries Made from Olivine-type Phosphate. N.p., 18 Apr. 2011. Web. 08 June 2012.
<http://www.greencarcongress.com/2011/04/sony-20110418.html>.

9. - 8 -
battery is repeatedly recharged without having been fully discharged first,
meaning that it causes its capacity to be reduced and shortening the actual
time that a battery can be used). This illustrates well what energy-saving
benefits the energy storage module has to offer.
 The module is safe and reliable, as it includes a built-in self-monitoring
function that detects any anomalies.
 The IJ100IM recharges up to 90% of its capacity in less than an hour.
 The product is also very scalable as variables such as the voltage and
capacity can be customized for different applications by connecting other
modules either in series or in parallel with the device.
 No maintenance is required to keep the module in good stand5
.
5
"Sony Global - Sony to Ship 1.2kWh Energy Storage Modules Using Rechargeable Lithium-ion Batteries." Sony Global -
Sony to Ship 1.2kWh Energy Storage Modules Using Rechargeable Lithium-ion Batteries Made from Olivine-type Phosphate.
N.p., 18 Apr. 2011. Web. 08 June 2012. <http://www.sony.net/SonyInfo/News/Press/201104/11-053E/>.
Sony.net ©

10. - 9 -
MANAGEMENT TEAM
As our company will be producing the IJ100IM Energy Storage module in
Chile, a new team was created to manufacture the product and advertise it in Chile.
This team is made of two managers, 10 plant workers and 15 salesmen. The
salesmen and plant workers are all Chileans and one of the two managers is Chilean
as well; the other one is Japanese.
The Chilean manager’s role is to supervise the production plant and manage the 10
workers. He has a 5 year experience as a manager and has worked for several other
consumer goods companies in his past. He is a good orator and knows how to
motivate the workers and communicate with them. He works closely with the
Japanese manager and speaks English fluently, as he has had experiences abroad.
The Japanese manager is the link between headquarters and the Chilean unit. He
has a 10 year experience with Sony. This assignment is his second international
assignment (the first one was in the United States), he speaks fluently English as well
which enables him to communicate with his fellow local manager. The Japanese
manager regularly reports progress to Headquarters in Japan and is the one to take
strategic decisions. He is used to uncertainty and knows how to cope with stress, as
well as working efficiently.
The 15 Chilean salesmen have all graduated from a business school and count at
least 3 years experience. They will all benefit from a one month training sessions
which will enable them to sell as many modules as possible, at least 2 per salesmen
per month.
HQ
Japanese
Manager
Salesmen Plant
workers
Chilean
Manager

11. - 10 -
MARKET AND COMPETITION
 The Consumer Electronics Market
As previously stated in the first part of this report, Chile hosts more than 17
million inhabitants, which represents a smaller market compared to other South
American countries and market such as Brazil, for example. However, the economic
growth and stability Chile has witnessed during the past few years as well as its
political stability make it a key market to start a business and to invest in. Our
product falls into two different markets, namely the consumer electronics market and
the energy efficiency market, which doubles the chances of succeeding in
implementing the module, yet we will only focus on the consumer electronics
market6
.
After the earthquake that hit Chile on the 27th
February 2010, many Chileans
saw their homes and appliances destructed and needed to replace them, after the
situation got more stable. This was a huge opportunity for consumer electronics
companies and retailers as their sales grew due to an important demand and thanks
to the Chileans greater purchasing power. Although most Chileans’ purchasing
decisions are price-driven, they are also looking for comfort, portability and
sophistication, as they increasingly need electronic devices that allow them to
perform several activities and function in reduced amounts of time. The consumer
electronics market is expected to grow at a compound annual growth rate of 6.8% to
$2.9 billion by 20147
.
 Competition
Existing energy storage modules can be found on the market, such as ABB’s
energy storage module or Corvus Energy’s AT6500 Energy Storage Module.
ABB is a Swedish power and automation technology company operating
worldwide that enables customers to improve their performance while lowering their
environmental impact. ABB’s module offers the same service the IJ100IM module
(power load-leveling and back-up energy resource) and offers up to 2 MWh. Given
the fact that ABB has offices in Chile and that it is a renowned enterprise on the
energy efficiency market, this can represent a threat for Sony; however ABB targets
mainly businesses and the module does not feature any lithium-ion battery, hence
the ABB module is not as efficient8
.
6
"Consumer Electronics in Chile." Passport. N.p., 12 Apr. 2012. Web. 07 June 2012.
<http://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx>.
7
"New Market Research Report: Chile Consumer Electronics Report Q4 2010." PRLOG Press Release Distribution. N.p., 19
Oct. 2010. Web. 08 June 2012. <http://www.prlog.org/11005850-new-market-research-report-chile-consumer-electronics-
report-q4-2010.html>.
8
"Energy Storage Modules (ESM)." ABB. N.p., Feb.-Mar. 2012. Web. 08 June 2012.
<http://www.abb.com/product/db0003db004279/420d3ae414b13c1285257782004792b5.aspx>.

12. - 11 -
The second module, Corvus Energy’s AT6500 Energy Storage Module, is also
made of a lithium-ion battery and seems to offer the same advantages the IJ100IM
module offers, yet the company has no business in Chile or South America and only
target businesses as well. This company does not seem to be a significant threat for
Sony as it does not have our company’s reputation nor is the module as power
efficient and esthetical as ours9
.
9
"Corvus Energy - Lithium Ion for Industry." Corvus Energy - Lithium Ion for Industry. N.p., n.d. Web. 08 June
2012. <http://www.corvus-energy.com/energy_module.html>.

13. - 12 -
MARKETING AND SALES
 The marketing plan
The IJ100IM Energy Storage Module has a very broad target market since the
product can be used by anyone for the same purpose. Businesses and middle-
income and high-income households are targeted, which means that the marketing
plan for these 3 segments will be different.
Concerning the business and professional target market, as previously
mentioned, Sony salesmen will be hired in order to sell the module to Chilean
companies all around the country. This technique, direct marketing, is often
employed to target B to B customers. This is an opportunity for Sony to acknowledge
the market in a better way as well as getting closer to the customer, establishing a
lasting relationship with them. It is of course also an opportunity for the companies to
purchase and possess the energy storage module, since it will allow them to operate
even in case of an unplanned event (such as earthquakes) and save money on their
energy bill. The salesmen will be trained beforehand and will hand out brochures and
demonstrate how the product works while visiting companies. This plan will take
approximately one year, focusing mainly on the capital, Santiago, and on other big
cities at first (Antofagasta & Conception).
The households on the other hand, have another way of responding to
marketing plans and Sony therefore created a B to C marketing plan. Billboards in
cities and retail stores will be displaying the product, as well as the Sony Logo, the
price and a sentence that will say “Be prepared for the unplanned: store your energy”
in Spanish. Retail store magazines as well as technology-oriented magazines will
also advertise the module and give a brief description on how it works along with the
key benefits one can get from buying and using it. It will take approximately 2 months
to have these advertisements printed. A television commercial will also be released
at the end of the first year when businesses will start utilizing the product and
households’ awareness is raised, which also gives enough time to create the
commercial. The advertisement will be informative so that it allows customers to raise
their curiosity and be informed. Emotional clues will be included in the commercial as
well to increase the feeling of need for this product.
 Key distribution partners
We identified 2 key retail partners that will be able to distribute the IJ100IM
Energy Storage Module: ABCDin, owned by AD Retail SA, and WEI.
ABCDin is the leading retail company in Chile and the most well-
known and trusted outlet by Chileans, which makes it a strategic decision
for Sony to create a partnership. ABCDin is located everywhere in Chile
and sells mid-priced home appliances and electronic devices to middle

14. - 13 -
income segments, which fits Sony’s marketing approach well. A noticeable
advantage concerning ABCDin is that the retail company created its own credit card
which makes it easier for consumers to buy products as they pay by fees. Sony will
also sell the module through ABCDin’s internet website, as a recent research shows
that the online buying trend is growing in Chile10
.
The second retail partner is WEI, an electronic specialist that
has presence in Santiago only. The retailer sells mid-priced
products imported directly from Asia and the USA and targets
middle-income households: our corporation will benefit from the
company’s habit of doing business with Asian countries; it will then be easier for the
module to be integrated on the Santiago market, as consumers are used to foreign
products.
 Pricing strategy
Knowing that 1€ equals 642.08 Chilean peso (CLP) and taking into account
that the energy storage module should be accessible and reach as many mid-income
and high-income households and companies as possible, we estimated the selling
price of the product to be 189,575 CLP, which represents about 300€.
Although this price seems high, the product will progressively get
“democratized” in customers’ minds, meaning that as time will pass, the price will
seem normal. It will represent an investment for households; however the 10 year
lifespan the module will procure allows the investment to be profitable. Moreover,
Sony intends to decrease the price during year 2 in order to attract more customers.
10
"Consumer Electronics in Chile." Passport. N.p., 12 Apr. 2012. Web. 07 June 2012.
<http://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx>.

15. - 14 -
BUSINESS SYSTEM & ORGANIZATION
Before developing the Business organization in detail, it is important to know
that Sony already entered the Chilean market, and has even opened a few shops in
Santiago de Chile. In fact, Chile and Japan even concluded an Economic Agreement
in 2007 which will reduce the overall risk of our investment and that will have to be
taken into consideration when building the business organization.
If we believe it is important to keep our retail shops to market our energy
storage module, we want to look at possible alliances at the same time in order to
adapt more quickly to the Chilean business context. Therefore our Business team
organization will be the following:
Sony’s will have a full control on the subsidiary, in fact it was
essential for us to assure the production and to protect the technology
Sony developed for many years to come up with this product. The
factory will be built in Rancagua, a city located near Santiago, which
is a good compromise between rent rates and distance to the Sony
shops in Santiago. In addition, Sony has already set up 4 shops in
Santiago, one in Concepcion and one in Antofagasta.
Sony
entertainment
(100% Equity)
Sony Chile
Ltd
Marketing
Department
& Customer
Service
Partnership
with Tresfa
Electricidad
Production
department

16. - 15 -
 The partnership with Tresfa Electricidad
Tresfa Electricidad is a company offering a wide range of
electrical services: maintenance and installation of electrical
networks, air conditioning installation, electrical isolation and
energy audit. The company is based in Santiago and is at its
inception; therefore we are more likely to interest them as we
will give them a strong product to put forward to their clients. In
fact, if they have the credibility and technical instruments to measure a company’s
electrical performance, the partnership with Sony will enable them to offer businesses
a strong energy efficiency solution. Therefore we want this partnership to result in a
stake in Tresfa’s marketing team – so as to acquire a consumer insight on the energy
efficiency market. In fact, having a stake in Tresfa marketing team will help us tailor
our offer to the specific requirements of the Chilean market, and in the meantime our
own marketing team will be able to adapt to the way of doing business in Chile. For
example, the relations to time, working relationships and even religion are totally
different in Chile and our company needs to quickly adapt to it. If it should not be a
problem for a company operating on a global scale like Sony, the partnership with
Tresfa will lower the risk of business failure and poor communication with customers.
 Hiring Plan
Our hiring strategy is crucial to the overall success of the venture; it is estimated
that about half of the business ventures fail within 4 years, and this is often due to a
weak human resources strategy. Sony’s human resources policy is to foster diversity
within its workforce, and to choose the best person for the position disregarding its
citizenship/ethnicity. Taking this into account, we developed the following human
resources strategy based around three main pillars:
Plant workers: We will hire about 10 workers for the factory in Rancagua. If it seems
like a quite low number of people, it is important to understand that most of the
production process is made by machines and robots. Even though the nationality is
not relevant in our selection process, we want to foster the integration of local people
in our workforce. The main skill we will be looking for is adaptability, and a good
general understanding of the product’s requirements. In order to raise awareness in
our workforce, we will make them try the product at home and get them to participate
to tutorials related to the use of the product. By doing so, they will be able to fully
embrace the Sony company and the importance of delivering a state of the art
product like our energy storage module.
Plant managers: We want to hire two managers, one of them being one of the Sony
employees in order to keep a good and constant communication between the
subsidiary and the Headquarters. The two managers will receive training on the
company policy and as well on how to conduct business meetings and general
management practices in Chile. They will both have to speak perfect Spanish and
English. Another important aspect we will be looking for in the future plant managers

17. - 16 -
will be an international experience; managers having an international management
background are more likely to be successful in driving the Chilean business.
Sales team: We want to hire a total of 15 salesmen: by doing so we will be able to
reach a good part of the Chilean businesses and homes. Our strategy will remain
quite similar to the plant workers: we will be looking for people with obviously strong
communication and sales skills but as well a good general understanding of our
product and company will be highly valued.

18. - 17 -
IMPLEMENTATION SCHEDULE
 Schedule
We designed the following Implementation plan beginning 2013 (our sales starting
2014):
Short term (2013) Middle term (2013-2016) Long term (After 2016)
1st
Semester : Recording
the company at the Chilean
chamber of commerce –
Visiting premises in order to
set up the factory –
Shipping machines to the
plant – Meet with banks
and the Headquarter to
obtain a loan to finance the
company/project – Meet
with Tresfa, ABCDin and
WEI to discuss the terms of
the partnership and to show
the product to their team
Launch production in the
factory and proceed to
adjustments if the quality
reached in not sufficient
Schedule video
conferences and meetings
with the Chilean managers
to control the company’s
results and atmosphere
Share insights and
techniques with Tresfa
marketing team and report
necessary adjustments to
sales techniques
Expand the sales team (5
additional employees in
2016 and 2018)
Acquire new shops in Chile
if the company is
successful enough
Expand operations to other
Latin American economies
(possibly Brazil/Argentina)
Obtain an interest in Tresfa
or in another energy
efficiency auditor
2nd
semester: Put in place
the Hiring plan (Meeting
candidates & posting job
advertisements) – Keep in
touch with Tresfa, ABCDin
and WEI and prepare the
marketing strategy (posters
and various
advertisements) – Meet
with locals and advertise
the products to them –
Prepare the shops with the
ads and set up the factory
utilities and machines.
 Responsibilities
The second plant manager from Sony will be in charge of all the administrative tasks
and the communication with the Headquarters. He will be in charge of the overall
strategy of the Chilean implementation. Financial tasks and others complex

19. - 18 -
transaction will be outsourced directly to the Sony Headquarter to ensure a better
reporting.
 Milestones
In order to benchmark the performance of our investment, we decided to put in place
a set of milestones:
2014 - Increase our sales by 20% - Have good press coverage of our business
activities.
2016 – Recover the initial investment – Open 2 new shops.
2018 – Being financially able to enter the Argentinean market.

20. - 19 -
FINANCE
Note: In order to be more accurate, all calculations and statements have been made
in Euros instead of Chilean Pesos.
 Assumptions
Since we do not have the figures of the Sony Corporation regarding the product
cost and other parameters, we decided to make a few assumptions in order to build
pro forma statements:
Revenue
The first year (2014) our energy storage modules will be sold through the six already
existing shops. We estimate that approximately 50 units per month will be sold in
each shop. As discussed in the pricing section, we will sell our product for 300€
(189,575CLP) .Therefore, the revenue grossed by our retail networks will be the
following:
1year Revenue retail = 50 units * 300€ * 12 months * 6 shops = 1,080,000€
For the revenue generated by selling the storage module to companies, we
estimate that nearly 250 companies will contract with us. This assumption is mainly
based on the fact that we will benefit from Tresfa, ABCDin and WEI’s wide pool of
customers. On average, these companies will need 10 storage modules to see
consequent gains on their energy bill and to have a safe energy backup service.
Consequently, we calculated the following revenue for the Business to business
section:
1 year Revenue B2B: 10 units * 250 companies * 300€ = 750,000€
Therefore the total revenue for the 1st
year amounts to 1,830,000€
Growth Rates
The following Growth rates have been used for the revenue: +20% in Y2 and
Y3 due to increased number of salesmen, +15% in Y4 and finally +15%. The reason
for the growth phasing out is that the market gets saturated and competition
increases as our company penetrates the Chilean market.
Expenses
Cost of Goods sold: Obviously, it is impossible to find data related to the cost of
producing these energy storage modules since this information is confidential and
Sony does not wish to disclose it. However, for a technological product such as our
energy storage device, we believe that most of the cost resides in Research and
Development and not in the actual production process. For this reason, we assumed
that COGS was 50% of our revenue.

21. - 20 -
Wages In order to calculate the expenses related to wages, we used the ”Ingreso
Minimo Mensual” (Monthly minimum wage) which amounts to 3456€ a year. With the
purpose of motivating our sales and production team, we will respectively pay them 2
times and 1.5 times above the minimum wage. The calculations for wages are the
following:
Year 1 Wages= 3456€* 1.5 * 10 plant works + 10000* 2 plant managers +
2456*2*5 salesmen = 106,400€
In year 3, 5 additional salesmen will integrate the team increasing the wage payment
to 140,960€, and likewise the wage account will rise up to 175,520€ in year 4.
Marketing
The marketing strategy explained in further details in the first part of the report will
incur a 200,000€ marketing strategy, that will steadily decrease as our products gets
more and more known in Chile major cities.
Investment cost
Land – Land prices in Rancagua are very cheap. After examining prices on the
internet (http://www.vivastreet.cl/loteos-lotes+rancagua) we believe approximately
50,000€ should be enough to buy a land of 5,000 m², which is a considerable space
meeting our requirements for the production processes.
Machines – We believe this cost will be very high. For this kind of technology, it is
very unlikely that we can purchase those machines from a country close to Chile. The
most realistic scenario is buying the machines from Germany, which will be very
costly in terms of transportation costs. In addition, those cutting-edge machines are
very expensive. This is why we believe that buying and shipping the machines &
equipment to Chile will cost us approximately €1,000,000.
Factory – Another major expense will be actually building the plant in Chile. In order
to build a state of the art factory, we believe 2,000,000€ should be sufficient due to
lower construction prices in Chile.

22. - 21 -
Revenue breakdown
According to our assumptions, an important part of our sales is made up from
business to customers (almost 60%). We believe that to be more accurate, the % of
our “households” customers will softly increase over the investment span to reach
60%. In fact, many expensive technologies comparable to ours are firstly bought by
businesses and then customers adopt it after the price shrinks.
 Financial Performance Analysis
Analysis based on the free cash flows shows that the payback period of the
project is 1.8 years. This means that we will recover our investment before the end of
2015, and is a sign that our investment is safe. In addition, profit expectations are
quite high with a net income over 1 million euro in 2017 and 2018. If we use a cost of
capital of 15%, the net present value of the project is very high (above 3M€).
Therefore we believe that the project is financially sound and could deliver high value
for stakeholders, not only on a monetary basis but also in terms of social benefits for
Chileans, economic development in the country and public image for Sony. In order
to reduce the risks inherent to the project, we could use an export strategy through
our partners’ retail shops so as to assess the demand in the first time, and afterwards
establish the plant in the upcoming years.
Sales
Business to Customer
Business to Business

23. - 22 -

24. - 23 -
i
http://www.commodityonline.com/news/latin-america-will-need-$572bn-for-power-sector-28025-3-
28026.html
ii
http://www.energy-enviro.fi/index.php?PAGE=2&NODE_ID=4&ID=3976
iii
http://www.marketwire.com/press-release/Latin-American-Growth-Driving-Next-Round-of-Power-
Generation-Investment-1291241.htm
iv
http://www.youtube. com/watch?v=YSfuKC7TUEM
v
http://switchboard.nrdc.org/blogs/amaxwell/an_analysis_of_chiles_new_nati.html
vi
http://www.heritage.org/index/about