Western Steel East


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This is an expansion plan for a small structural steel business.

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Western Steel East

  1. 1. Innovated by Michael A. Vargas
  2. 2. Market Summary <ul><li>Market: past, present, & future </li></ul><ul><ul><li>The steel fabrication industry is forecasted to see a 25 % increase in output in Phoenix. During the same time period California is expected to see a 15% decrease. </li></ul></ul><ul><ul><li>New population figures for the year ending July 1, 2006, indicate that Arizona is the fastest growing state in the United States, exceeding the growth of the previous leader, Nevada. </li></ul></ul><ul><ul><li>Therefore, Western Steel must utilize our association and certification with the American Institute of Steel Construction to procure niche steel projects which are presently underserved in Phoenix. </li></ul></ul>
  3. 4. Competition <ul><li>The competitive landscape </li></ul><ul><ul><li>Ironco Enterprises LLC </li></ul></ul><ul><ul><li>Schuff International </li></ul></ul><ul><ul><li>Arizona Structure Technologies, Inc. </li></ul></ul><ul><li>Western Steel will be essentially competing against approximately 20 other out of state businesses; mainly from California, that perform a similar scope of work in the Phoenix work. Per the AISC, only three companies currently have an AISC certification in Arizona. </li></ul><ul><li>All three of these companies focus on different type of work than Western Steel plans to perform. These companies fabricate structural steel for projects much larger and more generic than Western Steel. </li></ul>
  4. 5. Product Definition <ul><li>Western Steel will continue to fabricate structural and miscellaneous metals for the construction, rehabilitation, and improvement of conventional steel structures up to 3-stories tall utilizing our unique association with the Quality Assurance/Compliance entity known as the American Institute of Steel Construction (AISC). </li></ul><ul><li>The process and mechanisms employed by Western Steel in our San Diego Division will inherently remain unchanged and be the blueprint for what will occur in Phoenix; thus, providing another distinct advantage for our management. </li></ul>
  5. 6. Positioning <ul><li>Western Steel will effectively pursue a program of strategies that maintain the organization as a cost leader with minor inroads in differentiation and focus. Western Steel will compete by being the lowest cost producer in the Phoenix market. </li></ul><ul><li>Western Steel’s goal of distinguishing ourselves in this new market include promoting of our AISC certification, promotion of our state of the art mechanical processes, and promotion of our innovative management team. </li></ul>
  6. 7. Launch Strategies <ul><li>Launch plan </li></ul><ul><ul><li>Phase 1 -Begin to solicit business in the local area beginning on 1 st quarter 2008 </li></ul></ul><ul><ul><li>Phase 2 - Raise investment capital in the sum of $75,000.00 to procure facility, permitting & licensing, and local labor force </li></ul></ul><ul><ul><ul><li>$25,000.00 for facility and equipment </li></ul></ul></ul><ul><ul><ul><li>$10,000.00 for permitting and licensing and establishing other local fees </li></ul></ul></ul><ul><ul><ul><li>$30,000 for administrative costs, overhead costs </li></ul></ul></ul><ul><ul><ul><li>$10,000.00 incidentals </li></ul></ul></ul><ul><ul><li>Phase 3 - Launch fabrication for backlog/local work </li></ul></ul>2008 Jan Feb Mar Apr May Jun July Sep Oct Nov Dec Phase 1 Phase 2 Phase 3
  7. 8. Advertising <ul><ul><ul><ul><li>Clarify and more widely and effectively communicate our story, and integrate corporate history in more of our marketing communications materials. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Define a strong, visible spokesperson to give the company a face, voice, tone, and personality. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Participate as Sponsor in local events aligned with our mission and vision. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Review all advertising and marketing communications to evaluate whether or not we wish to reach customers with new advertising messages. </li></ul></ul></ul></ul>
  8. 9. Other Promotion <ul><li>Direct marketing </li></ul><ul><ul><li>Media based Introduction “Marketing” initiative </li></ul></ul><ul><li>Third-party marketing </li></ul><ul><ul><li>Utilize pre-existing customer base for referral work. </li></ul></ul><ul><li>Marketing programs </li></ul><ul><ul><li>Join local business associations and chambers of commerce </li></ul></ul>
  9. 10. Pricing <ul><li>Western Steel will price its projects according to a strategy of mark up pricing offering price discounts for return customers. Western Steel will attempt to maintain a 12-15% profit margin after direct costs and overhead are factored in. </li></ul><ul><li>With a strategy of mark up pricing, Western Steel should be well seated to perform its work. This type of pricing is commonly used in the construction industry and the cost breakdowns are a standard for the trade. </li></ul>
  10. 12. <ul><li>Western Steel forecasts the following payroll needs: $630,000.00/py </li></ul><ul><li>Western Steel forecasts the following Interest payments: $ 12,830.00/py </li></ul><ul><li>Western Steel forecasts the following licensing fees: $ 10,000.00/py </li></ul><ul><li>Western Steel forecast the following Admin/OH cost: $ 30,000.00/py </li></ul><ul><li>Western Steel forecasts incidental costs: $ 30,000.00/py </li></ul><ul><li>Total: $712,830.00/py </li></ul>Budgetary Issues
  11. 13. Distribution <ul><li>Western Steel plans on gaining the following from its channel distribution strategy. </li></ul><ul><li>Cost Savings in Specialization -Attempting to handle too many aspects of distribution may end up exhausting company resources. </li></ul><ul><li>Reduce Exchange Time –Reduce distribution costs by being experienced at what we do, perform our job more rapidly resulting in faster product delivery.  </li></ul><ul><li>Create Sales – Facilitate communication </li></ul><ul><li>Provide Information –Depend on distributors to provide information that can help improve our product.  </li></ul>
  12. 14. Conclusion… <ul><li>Lots of gain and lots of risk! </li></ul><ul><li>Stagnation or progress </li></ul><ul><li>Solidarity or Disunity </li></ul>