Auditing and Consulting Business Plan

Artemide Auditing & Consulting AG will adopt a focused market strategy.

• Logical segmentation breaks the market down into the following: Individuals, Investors, Small Businesses, Medium Businesses, Large Businesses, and Authorities and Public Organizations. Descriptions are provided below.
• The largest and most logical target markets for Artemide AC at the present are small and medium businesses. In a new “Financial Industry” Individuals and Investors become an important market segment.
• For our business, we do not have main competitors. We have a lot of widely-sized competitors in a vast market of services. This market environment gives ample opportunity for Artemide AC to create and expand a niche in the chosen market fields.
• Finally, worth noting is the growth trend for the general market, estimated between 5% and 10%, annually.

4.1 Market Segmentation

The following chart and table reflect the estimated market segmentation and growth for this business.

• Individual persons and Investors
• Small Businesses – Defined as businesses with 1 to 24 employees, this is the second largest and fastest growing segment in our region.
• Medium Businesses – 25 to 499 employees.
• Large Businesses – 500 or more employees.
• Authorities and Public Organizations

4.2 Target Market Segment Strategy

For our further development, we consider the following market segments to be very important:

• Individual persons and Investors.
• Small and Medium Businesses.

Artemide AC will focus its marketing strategy primarily on these market segments.

4.2.1 Market Needs

There are three different major opportunities (needs) in the fiduciary business over the next years:

1. Bookkeeping and other services related to the operative financial management (payroll, cost-accounting, accounting for pension funds, etc.).
2. Consulting and special mandates.
• Financial-Planning
• Business-Planning
• Business-Evaluation
• Merger & Acquisition
• Startup-Planning
• Restructuring
• Business Succession-Planning
• Coaching in Financial-Managing
• Recovery
• Special Audits, Reviews
• Analyses
• Investigation, Forensic Services
• Other
3. Legal Auditing (incl. IAS and other standards) as an independent and responsible institution.

We think that the need for consulting and other specialized fields has a strong growth potential.

4.2.2 Market Trends

Three primary market trends seem to be most important in our business:

• Trend 1- (most important) Rapid growth in complexity of business in an ever-changing market and competitive environment needs continuous and rapid adaptation in both strategy and structures of companies.
• Trend 2- (moderately important) In the future there will be a percentage of unsuccessful ventures resulting in more litigation, which, in turn, will emphasize the need for specialized audits, investigation, restructuring, etc.
• Trend 3- (least important) Predicted continued growth in consulting because companies will be unwilling to pay fixed costs of salaries, choosing instead to treat specialized financial knowledge and needs as variable costs from external sources.

Economically it is more expedient to acquire specialized services from a consulting firm that has its own specialized employees.

4.2.3 Market Growth

As noted in the previous section, several factors are predicted to continue well into the next decade, not the least of which we estimate the annual market growth rate between 5% and 10%.

4.3 Service Business Analysis

The fiduciary and consulting business for the local area is already well established, yet still allows ample opportunity for us. This is supported by the following points:

• Already in existence are a large number of firms – we think that most of the small and medium firms are operating in a limited spectrum of traditional fiduciary services (accounting and tax) and they do not have enough knowledge and/or time for entering the field of specialized services  – so we have new participants like banks, assurances, lawyers, and others entering the market.
• Customers in the fiduciary business tend to be loyal, relying on the same consultant for future needs once a relationship has been established – this fact requires establishing a good and intensive personal relationship with client. This, in the large, “big 6,” firms, is often not realizable because of staff turn over and inaccessibility of personnel.
• The globalization of markets will increase the demands for expansion of new services related to our business.

We believe our business is in a in a period of grand change. The competitors must be generalists and specialists at the same time. For small and medium fiduciary businesses, a focus of one primary segment of business is necessary. For example, if the “core” business is accounting, the other fiduciary businesses like tax, auditing, consulting must be reduced to a general level. In the core business, the company must be current with the services, while having the capacity to innovate (like new accounting services related to the Internet).

For our business, we do not have main competitors: We have many competitors in diversified services. More important than the competitors, is the need to get established in the right market and to develop this market with a strong and flexible strategy.

4.3.1 Competition and Buying Patterns

Competition in the general field of business consulting in the Luzern area is quite intense. Although numerous established companies offer a variety of services to different customer segments, Artemide Auditing & Consulting AG considers competition in our focus market niche of small and medium businesses to be modest. Customers in this segment strongly rely on the consultant’s professional qualifications and the ability to come up with viable solutions in a time- and cost-effective manner.