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Machinery & Hardware icon Machine Tooling Business Plan

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Machine Tooling

Strategy and Implementation Summary

The market strategy is to capitalize on our expertise by positioning the company to acquire strategic companies within the industry. We plan to leverage our expertise to acquire companies with product lines that compliment our manufacturing operations. The company’s goal in the next year is to secure more contract manufacturing positions. The company’s goal in the next five years is to continue with our “value added” scheme and embark on an acquisition program that will see the company take over key industry players.

5.1 Value Proposition

Machine Tooling’s products and services offer the following advantages to customers.

  1. Delivery. We provide on-time delivery, thereby reducing customer inventory and providing them with overall cost reduction.
  2. Quality. The products we supply are of high quality and have attributes that enable customers to carry out their business functions.
  3. Price. Our products competitively priced, thus helping customers control their own bottom line.

5.2 Competitive Edge

Machine Tooling has several highly significant competitive advantages:

  • Engineering and technical support service.
  • Automated system design and build.
  • Customer service and support.
  • Engineering and technical skills.
  • Cross-functional teams encourage creativity.
  • Quality systems are in place.

5.3 Marketing Strategy

The company’s marketing strategy will be to continue to promote sales of our product lines, systems, presses, automation projects, and machining capacity. In machining, focus will continue to be on components used in semi-sophisticated equipment where a possibility exists to pursue the next level of integration by assembling components or prepare part kits for assisted assembly. Focusing on this product-component relationship will facilitate the company’s ability to pursue the vertical integration of the business and pass on the value-added savings to our customers.

5.3.1 Marketing Programs

The overall marketing plan for Machine Tooling’s service is based on the following fundamentals:

  • The segment of the markets planned to reach.
  • Distribution channels planned to be used to reach market segments: television, radio, sales associates, and mail order.
  • Share of the market expected to capture over a fixed period of time.

Market Responsibilities. In order to capitalize on sales opportunities, Machine Tooling will require an effective promotional campaign. This will be accomplished through television, radio, and magazine advertisements, as well as posters on billboards throughout the state. To help our customers with name recognition, we will offer a variety of promotional items with the company logo on them; the initial giveaways will be t-shirts, stickers, mugs, and pens.

Investment in Advertising and Promotion. A fixed amount of sales revenues will go toward the statewide advertisement campaign. On an ongoing basis, we feel that we can budget advertising expenses at less than five percent of revenues to the company.

5.3.2 Pricing Strategy

Pricing for machined components is developed usually by conducting a thorough time study analysis. This involves tool and cutter selection based on the operations to be performed and the material being processed. Machining, traverse, and material handling times are calculated based on known feeds, speeds, and rapid traverse rates. This total is then factored by the company’s burden rate and profit margin, and then factored again based on market value.

5.4 Sales Strategy

Machine Tooling’s sales plan is to seek businesses that will advance the company’s quest to vertically integrate and become a stronger force in the manufacturing industry. The company will continue to strive towards procuring sales of our product lines and machining capacity. The focus in machining is securing contracts to produce components used in upper-end product lines, yielding opportunities for “value added” engineering.

To accomplish Machine Tooling’s endeavors, the company will utilize internal and external sales tactics. By aggressively seeking new accounts and taking full advantage of the existing relationships the company has with current customers and broadening its customer base, the company will expand and be able to compete with the leading companies in the industry. Machine Tooling plans to use a direct sales force, relationship selling, and subcontractors to reach our markets. These channels are most appropriate because time to market, reduced capital requirements, and fast access to established distribution channels.

5.4.1 Sales Forecast

The chart and table below outline Machine Tooling’s sales forecasts. The company will gradually increase the share of the high-value assembly services in its sales mix over the next two years, which will add to the company’s bottom line.

Machine tooling business plan, strategy and implementation summary chart image

Sales Forecast
2000 2001 2002
Automation $220,000 $330,000 $420,000
Production Machining $270,000 $360,000 $440,000
Specialized Manufacturing $710,000 $970,000 $1,600,000
Value Added Assembly $760,000 $2,400,000 $2,800,000
Total Sales $1,960,000 $4,060,000 $5,260,000
Direct Cost of Sales 2000 2001 2002
Automation $45,200 $67,000 $85,000
Production Machining $54,700 $73,000 $89,000
Specialized Manufacturing $144,400 $197,000 $325,000
Value Added Assembly $155,700 $490,000 $570,000
Subtotal Direct Cost of Sales $400,000 $827,000 $1,069,000