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OPERATIONS AND MANAGEMENT PLAN



Organizational Structure

Talking about the broadest range of objectives, the main goal is to provide sportsmen in general and football players in particular with basic snack items to satisfy their needs with food and beverages. Moreover, another aim is to expand the business of providing vending machines on the most main fields of Almaty; eventually, to reach and keep stable and high market share. Emerging deeply to the issue, the list is as follows:

· Purchase of needed amount of vending machines and coffee machines, to install them and prepare for use.

· Acquirement of products needed to fulfill the machines, perform this task on a regular basis.

· Based on surveys and customer demand research, to forecast future sales in order to reach the equilibrium between supply and demand.

· Considering abovementioned information, make strategic decisions about expansion and development of business.

Taking into account previously provided data the business will be subdivided into 3 main departments:

1. Administration.

The business is managed and controlled by CEO, who is responsible for main activities, such as planning, strategic research and development. Administration will monitor and control activities of other departments.

2. Accounting.

All the financial data and reports are collected, prepared and developed by accountant.

3. Sales and service.

Sales and service department is represented by purchasing agent and vending machines operator.

Personnel Numbers

Due to the initial nature of the business - self-service, the equation P=C/S is not applicable. The total number of customers can be estimated but to determine the required seems to be not rational to count.

Talking about labor expense, due to the reason that besides founders no employees are hired, salaries are not paid. While founders are ready till the moment business starts generating profit.

 

Overhead Expenses

Fixed:

· Rent: due to existing agreement with the owner of the fields on Shevchenko-Zharokov streets, rent expenses on VM will not be incurred. But considering the future expansion of the business, there is a possibility of appearance of some rental costs.

· Advertising: costs amounted 7000 KZT per month are paid for advertisement on olzhasports.com

· Depreciation: depreciation of equipment is calculated with a straight-line method as follows

For vending machine: total cost = KZT 720,000

Residual value = KZT 60,000

Useful life = 6 years

Therefore, depreciation expense for one year is estimated to be KZT 94,286. For one month KZT 7,857.



 

For coffee machine: total cost = KZT 345,000

Residual value = 0

Useful life = 6 years

Therefore, depreciation expense for one year is estimated to be KZT 57,500. For one month it is approximately KZT 4800.

Variable:

· Maintenance and repair costs: If some urgent issue takes place, costs associated with repair work, service and spare parts will be incurred. Budgeted M&R cost per month are estimated to be KZT 10000.

· Personnel expenses: the main item of expenditure of personnel expenses is gasoline. Due to repetitive road trips of purchasing agent to suppliers and VM operator to football fields, they will incur high monthly gasoline expenses. 10 km there and back again * average 30 days = 300 km per month => 4000 KZT per employee * 2 = 8000 KZT.

Total overhead expense per month = 7000+7857+4800+10000+8000=37660 KZT (rounded).

Total overhead expense per year = 36675*12 months = 440100 KZT.





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