Electronic Engineering Business Plan

Executive Summary
GAFAT Engineering, Inc. has established a strong foothold in a niche technology market for Product Category One devices. The potential market demand of 180 million units far outstrips the capacity of present suppliers and is growing at a rate of 10% annually in our under developed country. GAFAT's success in taking advantage of this boom market is assumption by its recent growth in sales and profitability. Sales are projected to grow from the first quarter of Year 1 total of 4,760,000 to 27,200,000 by the end of the first year, and to exceed 238 million by the end of the third year of operations. A similar growth pattern will cause before tax profits to rise significantly by the end of Year 1 and continue increasing through the end of Year 3. These results will be achieved without large additions to fixed assets. A relatively small banking facility will be needed in the form of a line of credit of 2,550,000-3,400,000 to support the necessary growth in current assets, half of which will represent prime corporate receivables. *Note: Propriety and confidential information has been disguised or removed from this sample plan.

1.1 Objectives

While working to develop GAFATs Engineering's image as the premier maker of Product Category One devices with the latest cutting-edge technology, the measurable objectives are:
1. Complete work to make GAFAT's products compatible with at least five of the most popular first-tier operating systems (by end Month 5, Year 1), and at least three others within one year.

2. Complete a thorough website redesign and get out a quality mailer to 300 Value Added Resellers (VARs) (by end Month 6, Year 1). 3. On the basis of a professional media analysis, arrange an effective advertising campaign in trade publications designed to target the telecommunications, industrial automation, and instrumentation sectors (by end Month 7, Year 1). 4. Through networking and partnering with operating system developers, technology manufacturers, and other industry players, arrange at least five banners/links on a reciprocal basis with key market-related websites. 1.2 Mission

GAFAT Engineerings mission is to develop cutting-edge Product Category 1 solutions for appliance and equipment makers who, due to the fast pace of technology, are under pressure to get their products to the market quickly and to advertise our poor country for the worldwide competitive centers. GAFAT achieves this by maintaining a small "think tank" style technical team, outsourcing the manufacturing, and keeping a marketing offering which caters to the more demanding Product Category One requirements, leaving the simpler high-volume and pricesensitive market needs to the competition. Note: Proprietary and confidential information has been disguised or omitted from this sample plan.
1.3 Keys to Success

The demand and growth potential is so overwhelming that success in selling Product Category 1 devices is virtually assured provided a few key aspects are kept in mind:
1. There is no problem in contract manufacturing the devices, provided a ready stock of components is available. Careful planning in ordering sensitive components is essential, and sufficient financing must be in place to support long inventory periods. 2. Avoid time-consuming inquiries originating from outside the chosen market targets. Everyone is interested in Technology 1. It is important to weed through the inquiries and respond to those that fall within sales and marketing parameters (needs between 100 and several thousand units, designed for use with high-ticket sophisticated equipment). 3. Move quickly to build a brand awareness for cutting-edge reliability. The market need for Product Category 1 devices is potentially so large that more competitors can be expected. It will be more difficult to build an image later.

Company Summary
GAFAT Engineering solely owned by the group members Ferew, Gashaw, Adinew, Tewodros ,Alemayehu and many more intellectual persons as well as some other workers. To capitalize on the growing demand for the Product Category 1 devices, the company will able to shifted from offering consulting services to the development of the Technology 1 hardware and software.

This prototype has been vastly popular with its group members and the company soon will start shipping the improved version of its device. For further development for the future; the company positions itself as a developer of high-end devices and selectively targets telecommunications companies, as well as smaller industrial automation and instrumentation companies, that have strong demand for the high performance Product Category 1 devices.
2.1 Company Ownership

Our group members collectively led as the founder, owner, and sole stockholder. The company is not publicly traded at the time of this writing but for the time being it will be the welfare of the society as well as the government. Note: Proprietary and confidential information has been disguised or omitted from this sample plan.
2.2 Company Locations and Facilities

GAFATs Engineering is not presently operates with its specified location for the development of the company but with the increasing of technology and the development of our country the leads to implement the company with out-side plant in order to protect the environment from the environmental hazardous. All manufacturing is out-sourced to contract manufacturers. *Note: Propriety and confidential information has been disguised or removed from this sample plan.

Products
GAFAT Engineerings products are off-the-shelf ready platforms containing all the necessary infrastructure for Technology 1, so that appliance makers can immediately focus just on their own specific product applications.
3.1 Product Description

GAFAT Engineering occupies an important segment of the "Technology 2 system" market. A Technology 2 system is any system that is physically incorporated into a product that performs a dedicated function or specific application. Consumer examples include kitchen appliances and home entertainment systems, whereas commercial examples are point-of-sale terminals, industrial process controls, etc. The button you press which toggles back and forth between total miles travelled and the trip mileage is an example of the many Technology 2 systems found in new cars. GAFAT specializes in the segment of the Technology 2 system market that relates to Technology 1. One example is the odometer as an ultra-simple Technology 2 system that does not normally require communication. However, one can imagine a company with a large fleet of vehicles wanting accurate, up-to-date information concerning mileage for purposes of scheduling servicing, or checking routing distances. The Technology 2 device that would be needed here

would require Technology 1. The "net" in this case would be a small, simple, closed net that would be comprised of the Technology 2 devices (called "smart" devices) connected to the vehicles' odometer (satellites) and one central terminal (the server) located at company headquarters. There is a whole array of means to connect the satellites and the server. A wire would obviously be inappropriate here. A digital radio wave would be the likely choice. Each individual odometer device would have a discrete identifier, and would communicate to the server. Each would have the potential to communicate to and from anywhere on in the world. However, in our example, it being a closed system, the rest of the world would not be permitted to gain access to these identifiers. This example clearly shows with the changes of technology from the time of the past to the present; that is way we will be able to open this broad and vast company in our country with large amount of money that loan from the government or with sponsored ship from the foreign countries or by sharing with the foreign investors or business men. GAFAT makes these Technology 1 devices. The basic device (here called Product Wrasse), about the size of a credit card, is comprised of:
1. A central processing unit (CPU). This is a very powerful chip supplied by Technology Manufacturer 1 which represents the computing brain. 2. FLASH chip. This is memory capacity that does not die when power is turned off. 3. SDRAM chip. Normal memory capacity. 4. A Controller. This governs the data flow from the satellites to the server. 5. GAFAT's proprietary Product Blennies. 6. Other elements like voltage regulators, electrical conduits to connect chips and external hookups.

The Product Wrasse, described above, would be bought by original equipment manufacturers (OEMs) to incorporate into their appliance. The unit might also be bought by an "integrator" who takes a basic odometer, plus the Product Wrasse, and adds some software to end up with a "smart" odometer which the market integrator then tries to sell to companies with fleets of vehicles that might have good need for this specialized product. GAFAT would configure the Product Wrasse so that it is compatible with the operating system used in the appliance, and would build in whatever FLASH and SDRAM capacity are needed for the designed purpose of the smart odometer. GAFAT's third product is an add-on to the basic Product Wrasse and is called the Product Damselfish. Going back to the odometer example: If the company with the fleet of vehicles would like to be able, once a certain mileage had been reached, to tell the driver: "Time for an oil change," then the Technology 2 device would need to have audio capability. Some applications might even need a video screen and a keyboard (like an ATM) for user interface. These capabilities are available through Product Damselfish. *Note: Propriety and confidential information has been disguised or removed from this sample plan.

3.2 Competitive Comparison

OEMs, who want to benefit from the trend toward Product Category One their products, typically outsource their needs. This allows the OEMs to concentrate on the design and application of their specific appliance without having to worry about the Product Category One aspect. Outsourcing this part saves the OEM in development costs, and more importantly, saves time in getting the appliance to the market. The attached table is a schematic of the main recipients of this outsourcing and the major features of the Product Category One devices offered by each.
1. Outsource Provider 1. The processor used is somewhat slower and parts costs are higher than with Technology Manufacturer 1's CPU chip. This company, by virtue of its parent being a contract manufacturer-assembler of smart devices, is primarily hardware-focused. It would not be easy for Outsource Provider 1 to switch from Technology Manufacturer 2's chip to Technology Manufacturer 1's. 2. Outsource Provider 2. This company seems to be market-segmenting to concentrate more on the multi-media market represented mainly by ATMs and kiosks (such as betting kiosks) which require a keyboard and a screen for user interface. 3. Outsource Provider 3. This company moved in the wrong direction from the start by using their own proprietary software which is built into their devices. This puts them at a real disadvantage. Their devices are the slowest, and the least flexible, but still fine for certain nondemanding purposes. The company has done some work for the HVAC market. Their lower price reflects their limitations. 4. Outsource Provider 4. This company is in close proximity to Software Manufacturer 1, is primarily a software company made up probably of ex-Software Manufacturer 1 people. This explains their emphasis on the Technology 2 software. Despite Software Manufacturer 1's operating system dominance in one market, the Technology 2 market is different. There are many widely-used Technology 2 operating systems. This company buys their hardware from Outsource Provider 1. 5. Outsource Provider 5. This companys products are distributed and supported the extra layer may explain the added price. Specs are similar to those of Outsource Provider 1. 6. GAFAT has made a considered effort to offer the fastest CPU chip and to build in the widest range of capacity (from low amounts of FLASH and SDRAM up to high amounts). GAFAT tries to make its units compatible with all the major top-tier Technology 2 world operating systems and will work with the second- and third-tiers as well.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.
Chip Type Speed OP 1 and Max. Flash Max. SDRAM Size Memory 64 MB COM Speed I/O Price Cards 14350-76565

Technology 32 MB Manufacturer 2 800

3.55" X 100 MB Y 3.775" per sec

OP 2

Fast 206 mhz Technology 32 MB Manufacturer 1 Slow Technology 1 MB Manufacturer 3 Fast 206 mhz Technology 32 MB Manufacturer 1 Technology 8 MB Manufacturer 2 800

32 MB

4" X 6"

10 MB per N sec X 10 MB per N sec X 100 MB Y per sec X 100 MB Y per sec X 100 MB Y per sec

3325

OP 3

256 KB

1.54" 1.93" 2.5" 2.25" 2.13" 3.94" 1.4" 2.4"

8149

OP 4

32 MB

4350

OP 5

64 MB

7440

Fast 206 mhz RNSE Technology 32 MB Manufacturer 1 3.3 Sales Literature

64 MB

3350-5650

See the appendices for product data sheets. ** Appendix materials omitted in this sample plan.
3.4 Sourcing

The chips and other basic building blocks used in GAFAT Engineering's Product Category One platforms can be purchased from a number of large distributors. Sourcing is not a problem, but order scheduling must be given careful attention. Shortages can occur, making it necessary to order well in advance and to stockpile in order to make certain that sales do not outstrip production because most of the materials could not be implemented in our country but imported from outside of the country so this leads to overcome the problems the shortage of the materials that used for implementation of our company.
3.5 Technology

Technology is moving at a rapid pace. The first commercial computer in the early 1970's had a speed, measured in megahertz, of only 0.1 Mhz. Now computers are on the market that race at 1,000 Mhz. Although the speed may still increase, a bigger area for growth involves Technology 2 systems, (rather than personal computers) and especially the Technology 1 uses of those Technology 2 systems. The appliance makers simply include a power cord and an appropriately sized plug. The consumer merely plugs the unit in and pays for whatever power he actually uses. The emerging technology now refers to another protocol of "assumed communication."

In the future, appliance makers will assume that everyone has an "Information Service Provider," and will build in Technology 1 right into every Technology 2 component that goes into each appliance. Until now, we have had to program the VCR ourselves before we leave the house if we want it to record a program on TV that will air while we're away. We also have to hope we did it right and actually record the last round of the Masters Golf Tournament (and not end up with several hours of some home shopping channel). However, with the new protocol, we will be able, from wherever we are, to simply contact our Information Utility (which will have all our appliance records). Product Category one appliance is not going to be reserved for simple on/off features. Now available on the market are many very sophisticated appliances such as a printer, a sewing machine with computerized embroidery capability, or data stream music. At the moment these are PC-dependent. Take a high-tech sewing machine like a Pfaff Model 7570. This machine with its Technology 2 system can perform complex sequences of operations including executing pre-programmed patterns and monograms and fonts. The difficult operations which are very user-interface intensive can be performed by the general-purpose PC into which the sewing machine (like a printer peripheral) is plugged instead of by the sewing machine's Technology 2 system. If this user-interface capability had to be built into the Technology 2 system of the sewing machine, the cost of that machine would skyrocket. Likewise, the MP3 player (data stream music) is extremely CPU-intensive. At the moment the encoding takes place on the general-purpose PC which allows the music player to have much lower requirements for CPU and memory. These devices are essentially one step removed from the Internet. Technology is moving quickly to remove the PC intermediary thus making the devices able to communicate directly with a content provider. Those capabilities of the generalpurpose PC will be replaced by the Internet itself thus making the appliances more flexible, more portable, and less expensive. PCs themselves will metamorphose into very light-weight, very inexpensive units without hard disks and without extensive memory. All these aspects will be provided by the Internet itself. Need file capacity? That too, can be provided by the Internet. A user can move around the globe and access his/her files from a very portable laptop. If the laptop is lost or damaged there will not be a crisis. Simply buy another (for maybe 14000 birr). All your files are safe, located elsewhere.

Market Analysis Summary

The market for Product Category One devices is keyed to the production of Technology 2 microprocessors. Over 180 million 32-bit microprocessors are being delivered annually out off country for the past time. But in our company could not be greater than the conservative estimates that have the market growing at 0.2% annually. Some estimates are much higher. Market trends indicate that most, if not all, of these microprocessors will want Technology 1. At the present time, the number of makers of off-the-shelf Product Category One devices is limited and unlikely to be able to fill the demand.

4.1 Market Segmentation

The Product Category One devices sold by GAFAT are connected to this total Technology 2 product market. The more products that are produced, the greater the demand for Technology 1. This does not include the 32-bit microprocessors placed in the 80 million PCs, the three million MACs, or the approximately one million work stations." Our mission for the development of the company is to produce the chips and the RAMs that able to produce the least available and cheapest microprocessors that leads as every person could able to buy by his potential and mostly considered the economical standards of the of the country. It is, however, the 32-bit sector that is growing fastest. It is this sector that is most meaningful in projecting the market for GAFAT's products. Of this total of 180 million 32-bit microprocessor units, the market research firm of Information Architects, claims that the market is broken up roughly into thirds:

Office Automation (34%). This included laser printers, faxes, feature phones, etc. Consumer (33%). Includes video games, portable games, CD players, and high-end audio visual equipment. Communications (28%). Includes network hubs, routers, switches, telephone infrastructure equipment. Automotive (3%). Military (1%). Other (1%).

In addition to the new Technology 2 microprocessors, there are hundreds of millions of older 4bit, 8-bit and 16-bit boards that have already been sold. These too, although ignored in the market study, represent a potential demand for Product Category One devices retrofitted into many of those microprocessors. The 33% consumer share of the market is characterized by high production runs and pricesensitivity. VCRs and MP3 players are good examples of products in this consumer market segment. Similar comments can be made concerning the office automation market segment as well. The third large sector of the market, telecommunications (28%) does not appear to be as price sensitive nor are production runs as large. It is this sector that has so far accounted for the majority of GAFAT Engineering's sales. The other category, representing only 1% of the total, probably includes various industrial automation products as well as testing and instrumentation. These fields, although small in relation to the three major categories, still accounts for over two million microprocessors placed in high-ticket equipment, nearly all of which will need Internet connectivity. The chart and table below summarize estimated domestic market potential for the GAFAT's products. As stated above, GAFAT will selectively focus on the telecommunications and other customer segments.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

Market Analysis 2000 Potential Customers Growth Office Automation Consumer 22% 22% 61 59 50 5 2 2 75 72 61 7 2 2 219 92 88 74 9 2 2 267 112 107 90 11 2 2 324 137 131 110 13 2 2 395 2001 2002 2003 2004 CAGR 22.32% 21.86% 21.55% 24.56% 2.67% 2.67% 21.71%

Telecommunications 22% Automotive Military Other Total 22% 22% 22%

21.71% 180

4.2 Target Market Segment Strategy

GAFAT Engineering plans to concentrate on the telecommunications segment of the market (28% of total market) as well as the industrial automation and testing and instrumentation segments (1% of total) as these sectors are most likely to have more demanding requirements which are suited to GAFAT's premier, cutting-edge of technology architecture. These sectors are most likely to be installing the Product Category 1 devices into high-ticket item instruments and appliances, thus making these clients less price-sensitive in relation to the high-volume consumer (MP3 players, Palm Pilots, etc). VARs and OEMs (Fortune 500 as well as venture capital startups) connected with these market sectors are the most attractive target customers for GAFAT.
4.2.1 Market Needs

The market, whether it is a maker of telecommunication switches, industrial automation equipment, or a VAR with a time and money-saving idea for a specific industry, wants to concentrate on its special product and bring it to the market place as soon as possible--hopefully ahead of the competition. They want to out-source the Technology 1 need because they know that trying to engineer it themselves would be more expensive and slow down the launch of their end product by six to nine months. Some Technology 1 need, for example, an inexpensive 4-bit microprocessor lodged in a thermostat, can be satisfied without spending 16,350-18,650 for a GAFAT Engineering Product Wrasse. This need would be satisfied by one of the low-end devices (like Outsource Provider 3). GAFAT needs to focus on the customers with the more demanding requirements for Product Category One.
4.2.2 Market Trends

The market trend is to add Technology 1 to just about everything, leading eventually to a view of the future well-expressed by the CEO of Hewlett-Packard (see the section on Technology). The trend is moving so quickly that the market is having problems keeping pace with the demand. Reports of component shortages among chip makers have been in the business news. For the foreseeable future, we can expect Technology 1 products to be a sellers' market.
4.2.3 Market Growth

The market for 32-bit microprocessors could be increased by the amounts to a 0.2% annual growth rate (see the section on Market Segmentation). The 32-bit microprocessors were delivered, not counting those that were used in computers and work stations. A 0.2% growth rate comes to an additional 1 million annually. Nearly all of these will need Technology 1. The total unit sales projected for GAFAT Engineering for the future three years will amount to only 0.4 of that. In the demand of more specific market data, we have projected market growth at 0.2% for every segment of the Technology 1 market, although it is likely that some segments will grow faster than 0.4% annually and others perhaps less.

4.3 Industry Analysis

The industry encompassing Technology 2 microprocessors, the operating systems housed in them, the makers of components used to build them, and the people developing software to make special applications possible is quickly mushrooming into one of the world's largest industries as our company vastly developed and greatly advanced for the next 20-30 years. To be successful in marketing a Product Category One device it is essential to understand the patterns and major players in the industry.
4.3.1 Competition and Buying Patterns

Currently, demand for the Product Category One devices outstrips supply. With the trend of adding Technology 1 to almost any appliance, demand will continue to grow. The variety of offered platforms and configurations of such devices lead to the market fragmentation where no incumbent company holds a major market share. For low-end devices, pricing is one of the major factors. However, for high-end devices, such as the products supplied by GAFAT Engineering, high technical specification and flexibility with major operation systems are more important.
4.3.2 Main Competitors

The main competitors for GAFAT Engineering's products are listed in the section on Competitive Comparison. The listed competition is unlikely to even come close to satisfying a large portion of the demand for Product Category One devices indicated by market research. But our company as a beginner no more competitors to the world largest electronics companies but for the future we have planned to overcome as competitors with the increasing working of the company and more advanced technology and more and more intellectual persons could able to scarifies their knowledge to be competitive. One hundred, eighty million 32-bit microprocessors being delivered annually with a projected growth rate of 0.2% is a huge market for Technology 1, not to mention the billions of microprocessors already delivered in stock configuration. Obviously, much of the Technology 1 will be done by internal engineering. But this option has serious drawbacks for the company trying to develop this feature on its own. First, its engineers have to examine hardware and software options, which, given the number to choose from, could take months.

Will the component support the input/output (I/O) requirements needed by the product? Do separate add-on components need to be designed and manufactured? Which operating system vendors support the component? Does the hardware vendor support the operating system (O/S) vendor? What about integration of the hardware and software?

After months of evaluation, and spending 25,000 on a leading real-time operating system (plus another 110,000-120,000 buying and building hardware), more months will pass building, debugging, and integrating the operating system with the software. More time is spent writing

the application. An engineer (who is an expert in the chosen operating system) will need to be hired, and each year another 75,000 will need to be spent in O/S upgrades and software. Keeping up with protocols and standards will also take time away from development efforts. In the end, hundreds of thousands of dollars can easily have been spent just on the task of adding Technology 1 to the product internally. The end product, now including Technology 1, will have been delayed getting to market by six to nine months. This delay to market aspect is the strongest deterrent to attempting to engineer one's own Product Category One device. *Note: Propriety and confidential information has been disguised or removed from this sample plan.
4.3.3 Industry Participants

There are several major components in the industry: Microprocessor Manufacturers The sheer variety and quantity of microprocessors is small enough in relation to desktop computers. There are only a few choices with desktop computers as Technology Manufacturer 1's MMMM architecture increasingly dominates. But with microprocessors there are a wide variety of tiny fractions of the total volume of microprocessors shipped each year. Even if we restrict the count to only 32-bit chips, there are more than 100 different microprocessors currently on sale. This does not take count of the all the different speed grades or packaging options. These 100 different microprocessors represent more than a dozen instruction-set architectures. Some of these manufacturers have large sales forces and large marketing budgets. The ability to attract the attention of one of these large manufacturers is key to marketing Product Category One devices. Operating Systems Microprocessors must have an operating system in order to function. Again, unlike the desktop market where DDDD dominates, there are many competing operating systems. . When a manufacturer of an automated milling machine chooses a Product Category One device, he will want one that is compatible with his chosen Technology 2's operating system. In fact, the first time he hears about a particular Product Category One device it is likely to be through the salesman who sold him his operating system Market Integrators Market Integrators are often referred to as value added resellers (VARs). There are countless VARs who develop special applications which are usually industry-specific. For example, Reseller 1 is a VAR engaged in software related to building maintenance. This involves Product Category One thermostats and other building maintenance connected equipment in large office buildings. These VARs are heavy users of Product Category One devices. OEMs Original Equipment Manufacturers have quickly recognized the importance of adding the power of the Internet to their equipment, for example, the manufacturer of an automatic scale for use in

a production line. The scale will weigh every packet of tea passing along the belt to check that the weight is within certain tolerances. If not, the packet is removed from the line by compressed air. By adding Technology 1 to the scale, the scale's activity no longer needs to be visually monitored by a human in the production hall, but can be remotely monitored from a central location. This is especially interesting for a factory with a dozen production lines. The same evolution is having an impact on almost every type of equipment. The OEMs are important customers for Product Category One devices as the device adds very little cost relative to the ticket price of the equipment. *Note: Propriety and confidential information has been disguised or removed from this sample plan.
4.3.4 Distribution Patterns

There are large established distributors of microprocessor chips, and other components. It is possible that one, or all, of these distributors may consider offering a Product Category One device soon with a few limited configurations. However, the main distribution channel for GAFAT's products is direct. The buyer may have heard about GAFAT through a Technology Manufacturer 1 salesman, or through an operating system salesperson, but the sale would be handled directly. Most inquiries come initially via telephone or email over GAFAT's website.

Strategy and Implementation Summary

GAFAT Engineering's marketing strategy will be to concentrate on the large telecommunication sector of the market (28% of 180 million units annually), as well as the smaller industrial automation, and the instrumentation sectors. In keeping with GAFAT's trim organizational structure, growth in sales will be closely keyed to success in its partnering relationships with Technology Manufacturer 1 (its main component maker), developers of operating systems, as well as with suitable VARs. It will be necessary to augment sales staff. This "push" marketing will be supported by some "pull" marketing in the form of advertising in specialized trade publications. At the moment supplying Product Category One devices is a sellers' market, however, with demand projected to outstrip supply, more makers of these devices are likely to spring up. It is important for GAFAT to leverage its present ground-floor position in the supply of Technology 1 devices by building a market image that will make it difficult for later entrants to make in-roads into GAFAT's target market sectors.
5.1 Competitive Edge

GAFAT Engineering's competitive edge stems from the high technical specifications of its products. The company develops top-of-the-line Product Category One devices that can work with all the major operating systems available in the market. Further, GAFAT has developed a very favorable partnership with Technology. Moreover, GAFAT's compatibility with all the firstand second-tier operating systems provides a unique opportunity to capture the market share.

5.2 Marketing Strategy

GAFAR Engineering will concentrate on the more demanding sectors of the market and, in doing so, build an image for the highest cutting-edge technology among the various makers of Product Category One devices. Pricing on the high side is consistent with that image, and alignment with Technology Manufacturer 1 (the premier CPU maker), and the first-tier developers of operating systems will further enlarge that image. In addition, an investment should be made in image-bolstering advertising in targeted trade publications serving the chosen market segments.
5.2.1 Positioning Statement

GAFAT Engineerings positioning statement is to stay on the cutting edge of Product Category One device technology by constantly improving its products ahead of the competition with such features as the Product for Technology Manufacturers product. GAFAT will target customers in the demanding telecommunications, industrial automation, and instrumentation sectors rather than to market-segment a narrower field with lower Technology 1 requirements which tend to be more price-sensitive. *Note: Propriety and confidential information has been disguised or removed from this sample plan.
5.2.2 Pricing Strategy

For projection purposes, pricing has been based on production costs at 40% of sales price. This pricing scheme seems to put GAFAT Engineering's products on the high end of the ball park with the competition (see the section on Competitive Comparison), which is consistent with the image RNSE wants to build for its products. Product Category One devices are not yet perceived as "all-the-same" commodities, with price being the only deciding feature. In line with GAFAT's positioning statement, GAFAT's market sectors are the more demanding ones (telecommunications, industrial automation, and instrumentation) as its increasingly over coming broader and broader for the future with the will of technology that leads. These customers are installing GAFAT's devices into sophisticated, expensive equipment, and are more likely to make a choice based on which Product Category One device has the highest technical specifications and flexibility in respect to operating system compatibility, choices in configuration, etc., rather than price.
5.2.3 Promotion Strategy

Although GAFAT Engineering does have sales positions in the personnel plan, GAFAT's promotion strategy will stress "partnering" as its main means of getting the word out concerning its products. The importance of partnering with major industry players (see the section on Industry Participants) is explained below: Partnering with Technology Manufacturer 1 Technology Manufacturer 1 has a large sales force and is the industry leader with its CPU chips

that owned with our company. All of GAFAT's products contain this chip, which is a good foundation for Technology Manufacturer 1 wanting to promote GAFAT's products wherever possible over other Technology 1 devices that use Technology Manufacturer 2's chip. This is expected to result in increased volume of inquiries to GAFAT's website, and help build the desired image. GAFAT has awakened a great deal of special interest in Technology Manufacturer 1 by developing a Product of their product. Technology Manufacturer 1 visited GAFAT recently and expressed interest in using some of GAFAT's products internally, or in some sort of jointventure. Partnering with Real Time Operating System (RTOS) Developers As mentioned elsewhere in this plan, compatibility with existing operating systems is key to Product Category One device sales. The following is a list of most of the first- and second-tier operating systems: O/S Vendor Compatibility with RNSE Products

CCCC software completed. DDDD ready by end May. EEEE ready by end May. FFFF being done by FFFF. GGGG ready by end May. HHHH ready within one year. IIII ready within one year. JJJJ ready within one year.

Some of these top echelon O/S developers have hundreds of salespersons which translates into sizeable promotional activity, as virtually all customers for operating systems have Technology 1 in their plans. Partnering with the first tier O/S developers will also serve to build that allimportant image for GAFAT products. Partnering with Market Integrators Market Integrators are heavy users of Product Category One devices. Hundreds of these VARs have sprung up who have developed software, and attached hardware designed to address problems, or save time and money for a specific industry. Most, if not all, of these VARs utilize Technology 1 as part of their value added offering. Special instrumentation or monitoring devices which attach to hospital beds that can sense wet sheets or patient body temperature are good examples. These devices all require satellites units located at each bed have a Technology 1 device like RNSE's Product Wrasse. Considering the number of hospital beds alone, it is easy to see why the VARs represent prime customers for Product Category One devices. These VARs may first hear about GAFAT's products through one of the operating system developers or via a search through the Web. In addition, GAFAT plans to get out a direct mailing to a list of 300 VARs. *Note: Propriety and confidential information has been disguised or removed from this sample plan.

5.2.4 Distribution Strategy

There are no immediate plans to wholesale GAFAT Engineerings products. There might be opportunities to distribute some Technology 1 devices to one of the major component wholesalers, but this could only be possible in limited configurations. All sales are expected to be direct sales. This should be qualified as many major customers out-source their manufacturing. XYXY, for example, is a customer of GAFAT, but they subcontract to SRSR who actually purchases the enabling devices from GAFAT. In the case of VARs, they would purchase from RNSE and install them in the equipment being sold to someone else. The target market customers addressed in RNSE's positioning statement should have unit requirements of 100-10,000. With annual sales volume projected reaching 30,000 in the third year, direct sales should not be a problem logistically. *Note: Propriety and confidential information has been disguised or removed from this sample plan.
5.2.5 Marketing Programs

The most important element in GAFAT Engineering's marketing game plan is to complete programming of its products to be compatible with the top tier operating systems (see the section on Promotion Strategy). Completion is planned for the end of May 2006 E.C. As soon as this has been done, partnering activity with those operating systems developers can begin in earnest. Informational releases via email to O/S sales forces containing data specifications should be encouraged. Opportunities to speak at O/S developers' sales meetings should be sought. This will be coordinated by the new sales manager position. In conjunction with the above activities, a direct mailing to VARs should be undertaken. An upto-date list of 300 VARs can be obtained through Software Manufacturer 1. A budget of 1,000,000 has been provided for in the cash flow projections. Since many first impressions of GAFAT's products are made by a visit to its website, it is important to give RNSE's website a face lift. The Cyber Design Group as well as other professional website designers are being considered. A budget of 715,000 has been provided for in the projections. This is the shop window first seen by potential Technology 1 device customers. The website design must put the desired image at the top of its priorities. Included in this budget are some ad agency costs, as most Web designers are really technicians who have little knowledge of the art of image building. The website technician and the advertising specialist need to work together to get the right result. To help increase awareness of and build the desired image for GAFAT's products, advertising should be done in targeted trade publications. A media specialist should be consulted to help in selection. In keeping with RNSE's positioning statement, trade publications which reach OEMs in the telecommunication, industrial automation, and testing and instrumentation sectors of the market should be favored. It is important to provide an adequate budget to make certain of attracting notice. A media specialist can examine the "noise level" (the amount of competing ads) to suggest how much needs to be spent to break through the noise level and be heard. Until

a proper media analysis can be done, a budget will be initially set for year 2006 at 950,000 growing to 2,750,000 in year 2007 by assumptions.
5.3 Sales Strategy

The general sales strategy is to concentrate efforts on those sectors of the more demanding 32-bit microprocessor market that have volume needs of 100 to several thousand. Despite the dramatic increase in visits to GAFAT Engineering's website, a more proactive policy needs to be taken by directly approaching heavy users of Product Category One devices. Calls must be made on selected VARs, and OEMs who fit the parameters set by GAFATs marketing strategy. Referrals from GAFAT's partnering program (operating system partners, Technology Manufacturer 1, and other industry players) will be stressed. GAFAT plans to add a sales manager as well as other sales personnel (see the section on Personnel Plan).
5.3.1 Sales Forecast

Over 400 units of GAFAT Engineering's first generation product will able to sells in the first quarter of 2006 without any dedicated sales staff other than the owner and an administrative assistant. In keeping with GAFAT's need to stay on the cutting edge of technology, a faster, smarter, smaller improved product is now ready which should easily succeed in reaching the company's sales goal of 1040 units by the end of the year, increasing to 3000 and 9000 in the second and third year respectively. This is not an unrealistic achievement considering the market demand for this product, as evidenced by GAFAT's actual sales growth in the coming year and the growth in visits to GAFAT's website which have grown from a few thousand a year ago to over 30,000 website visits monthly as of May 2006. With sales prices set at 2.5 times variable costs, gross profits are expected to reach nearly 17 million in the first year and nearly 153 million in the third year. The sales projections forecast three GAFAT products, made up of a main product (Product Wrasse) and two other products (Product Parrotfish and Product Damselfish) each of which constitute the main product with several add-ons (see the section on Product Description). Within these three products, customers have several choices in the configuration in respect to the amount of FLASH (from 1 Mb up to 32 Mb) as well as SDRAM (8 Mb up to 64 Mb). Depending on the configuration options, the costs of materials range as follows:

Product Wrasse: 3132.10 up to 6193.85. Product Parrotfish: 11,210.60 up to 12,272.35. Product Damselfish: 13,150.10 up to 23,211.85.

To simplify projections, we will assume only one configuration for all three products. This configuration is with 32 MB DRAM and 4 MB of FLASH. The costing then will have the following breakdown for the basic product, the Product Wrasse: *Note: Propriety and confidential information has been disguised or removed from this sample plan.

The Product Parrotfish starts with the basic Product Wrasse (13,165.85) and adds Technology 1 components (627.00), a modem module (435.00) and several other minor parts (316.50), bringing the cost up to 3,244.35 as compared to the presently developed product in the worldwide and by considering the qualities of the products that is much more cheap and less qualified but it could be found everywhere in our under developed country. The Product Damselfish starts with the basic Product Wrasse (2805.85) and adds an audio interface ($10.00), Technology 2 components and connectors (170.00), bringing the cost up to 1683.85. See the section on Pricing Strategy for explanation of pricing policy.

Sales Forecast 2000 Unit Sales Product Wrasse Product Parrotfish Product Damselfish Other Total Unit Sales Unit Prices Product Wrasse Product Parrotfish Product Damselfish Other Sales Product Wrasse 9,428,480 17,236,000 54,120,000 1,040 1,040 1,040 38 3,158 2000 7,412.00 3,000 3,000 3,000 0 9,000 2001 6,412.00 10,000 10,000 10,000 0 30,000 2002 6,412.00 2001 2002

11,610.00 11,610.00 11,610.00 9,457.00 9,457.00 9,457.00

21,995.00 21,995.00 21,995.00

Product Parrotfish Product Damselfish Other Total Sales Direct Unit Costs Product Wrasse Product Parrotfish Product Damselfish Other Direct Cost of Sales Product Wrasse Product Parrotfish Product Damselfish Other

2,634,400 1,830,000 6,100,000 475,280 75,810 1,371,000 4,570,000 0 0

1,613,970 4,437,000 14,790,000 2000 165.85 244.35 183.85 630.00 2001 165.85 244.35 183.85 630.00 2002 165.85 244.35 183.85 630.00

172,484 254,124 191,204 23,940

497,550 733,050 551,550 0

1,658,500 2,443,500 1,838,500 0

Subtotal Direct Cost of Sales 641,752

1,782,150 5,940,500

5.3.2 Sales Programs

The most important sales program is the program based on "partnering" (see the section on Promotion Strategy). By constantly being in touch with the activities of Technology Manufacturer 1, and the operating system developers, and by developing relationships with their extensive sales teams, referrals can be expected to VARs and OEMs who fit the parameters set in the marketing strategy. Once a solid sales prospect has been identified in this manner, more specific action can be taken directly with the prospect. This action would include more technical discussions between GAFAT Engineering and the prospect's engineers. "Starter Kits" can be arranged which make it

very easy for the prospect to integrate hardware and software between the Technology 1 devices and the appliance. Once a starter kit has been sold, telephone follow-up is necessary to convert the original opening into a substantial sale of 100 or more units.
5.4 Strategic Alliances

As already explained (see the section on Promotion Strategy), strategic alliances between GAFAT Engineering and Technology Manufacturer 1, the chip manufacturer, and the top tier operating system developers like WWWW, XXXX, or LLLL are essential to success in selling large quantities of enabling devices. Partnering leads to referrals which can be filtered as to needs, and many referrals can be expected to transform into completed sales. The prospects for a deeper strategic alliance with Technology Manufacturer 1 are possible as a result of Technology Manufacturer 1's recent visit to RNSE. Technology Manufacturer 1 is especially interested in GAFAT development of a Product for the Technology Manufacturer 1 product. Technology Manufacturer 1 expressed an interest in working together to exploit the product.
5.5 Milestones The attached table lists the major milestones in the first year that are key to the success of the company's overall market strategy for our companys development for the future.

Milestones Milestone Start Date End Date 7/1/2006 8/1/2006 9/1/2006 Budget Manager Department electrical electrical Marketing

Mailing to 300 7/1/2005 VARs Website Design Trade Ads Journal 8/1/2005 9/1/2005

31,000 Ferew 15,000 Gashaw 50,000 Any one

Five Major O/S 6/1/2005 Programming

6/1/2006

Alemayehu electrical

Second Tier O/S 12/31/2005 12/31/2006 Programming Partnering Banners/Links 12/31/2005 12/31/2006

Adinew

electrical

Tewodros electrical

Totals

96,000

Management Summary
The management of GAFAT Engineering is led by the owner/founder, the members of the group, who has extensive technical experience in consulting to the industry. A profitable track record indicates the presence of business acumen. Important additions to sales and marketing staff should round out the needs of the company to achieve the projected goals set by the sales and marketing strategy.
6.1 Organizational Structure

GAFAT Engineering plans to increase the number of employees to five in the second year and to ten by the third year. Half of these with are sales staff reporting to a sales manager who reports to the owner. Two relatively low-level technicians will be included to deal with repairs and testing of returns. The technicians will report to owner of the company, but there will be a good deal of interaction with the administration manager as well as with the sales manager. The software engineer will, like the outside consultants, report directly to the owner of the company also.
6.2 Management Team

The major members of the management team are group members, owner and founder, as an administrative assistant, Ms. Ferew, and two independent consultant-engineers, who, as is common in the industry, prefer to remain independent rather than become full-time employees. This team will be augmented by a sales manager who will coordinate the activities of those responding to telephone and website inquiries with direct sales efforts to VARs and OEMs referred through the partnering program, and a full-time software engineer.
6.3 Management Team Gaps

It is vital that a more proactive approach to selling be initiated to take full advantage of the partnering program which leverages the connections with operating system developers. There are about 300 VARs which certainly justifies a dedicated sales person. The number of original equipment manufacturers is also high enough to warrant employing someone with experience in dealing with large OEMs. A sales manager should first be employed to oversee these sales efforts and to coordinate the involvement of media specialists and ad agency work. The Personnel Plan projects the addition of this staff.
6.4 Personnel Plan

The founder and owner, GAFAT members, during his years spent as a consultant to the industry, has many contacts among software and hardware engineers. They have utilized them on a contractual basis for much of the software engineering during the development of GAFAT

Engineering's product line. They will still use them and their cost can be seen on the income statement under the heading "Contract Consultants" rather than in the Personnel Plan. Sales Manager The primary duties of the sales manager will be to coordinate the activity of media people to make certain the correct amount of advertising is spent in the most suitable trade publications and that the campaign adequately meets the goals of GAFAT's positioning statement. The sales manager should be engaged as soon as possible. A starting salary of 960,000 is budgeted with increases to reward sales growth based on the economic increments or development for the future that leads to overcome the retards.. Sales Staff Reporting to the sales manager will be salespersons who will work primarily via telephone and email. One to concentrate on VARs and another to concentrate on OEMs. One each will be added by the end of 2005 after the sales manager is in place. Starting salary projected at 680,000 annually with increases connected to sales success. Two more will be added in the third year. Technicians Beginning in year 2005 two low-level technicians need to be added to deal with returns, repairs, testing, etc. Salary of each is projected at 345,000. Software Engineer Despite the excellent success that GAFAT has had with independent consulting engineers, it will be advisable by 2005 to hire a permanent in-house software engineer at a salary of 20,000.

Personnel Plan 2005 President Sales Manager Office Manager Salesperson (VAR's) Salesperson (OEM's) Technicians 100,348 30,000 25,500 0 0 0 2006 100,000 75,000 38,400 50,000 50,000 0 2007 100,000 90,000 38,400 110,000 110,000 90,000

In-house Software Engineer Other Total People Total Payroll

0 0 2 155,848

0 0 5 313,400

80,000 0 10 618,400