LPG Delivery Inc.: Business Plan
The LPG Delivery Inc. is a local company that will operate in the Middle East. The company will be founded in 2018, and it will provide individuals with a mobile application which they will use to order and make payment for the home delivery of liquid petroleum gas. The company’s headquarters will be in Dubai, United Arab Emirates. At its peak, the mobile application is expected to be used in sales worth about $50,000 weekly.
LPG Delivery Inc. is a local e-commerce business that provides a platform that is used by sellers and buyers of cylinder-packed liquid petroleum gas. Customers using the company’s mobile application will be able to order and make payments for the delivery of cylinder-packed liquid petroleum gas to their premises. The company will start its operations in 2018, and its primary markets will be major towns in the United Arab Emirates. The main reason behind the company’s decision to venture into these markets is because they have a high demand for cylindrical-packed liquid petroleum gas.
The headquarters of LPG Delivery Inc. will be in Dubai, in the United Arab Emirates. Initially, the company will start its operation in Dubai because its offices will be in this region. Additionally, the company’s management comes this region, and are adequately competent on how this market operates. Therefore, they will help the company to easily penetrate the Dubai market. The business is also registered as a private company that has only three shareholders.
Liquid petroleum gas, which is simply known as LPG, refers to flammable hydrocarbon gases that include propane and butane. These gases are used for heating, cooking, and auto fuel. The type of gas supplied to each country differs depending on its policies. In this case, either propane, butane, or propane-butane are supplied (Denehey, 2011, pp. 34). LPG gas naturally occurs in some countries and is extracted through petroleum refining processes. LPG is normally pressurized and stored in gas cylinders or tanks (Denehey, 2011, pp. 34). Due to its popularity in heating and cooking, there is always a high demand for this product all over the world. Accordingly, the LPG Delivery Inc. application will serve the needs of most customers who regularly purchase this product.
The market analysis of the LPG Delivery Inc. will help in assessing the size and value of the users who will use the company’s products. The company will conduct a PESTEL analysis to assess its market. The name PESTEL is an acronym of political, economic, social, technology, environment, and legal (Wheelen, Hunger, Hoffman, & Bamford, 2014, pp. 34).
LPG Delivery Inc. will be located in Dubai, United Arab Emirates. Dubai is highly interconnected to other parts of the country, and has a good transport network for gas cylinders delivery. Since the United Arab Emirates is a major global seller in petroleum products, it provides a lot of financial and non-financial support to companies that enhance the use of these products. In this regard, Liquid Delivery Inc. will enjoy political support for its e-commerce business from the government.
The future consumption of liquid petroleum gas is positive. With increased urbanization, mostly due to rural-to-urban migration, the demand for LPG will continue to rise. Additionally, since more and more people are becoming conscious of the need to protect the environment, most people have embraced LPG as the best alternative for firewood. Further, the rise of tourism in the UAE is also increasing the consumption of gas in hotel businesses.
In most societies, LPG is considered the preferred source of heat. The current advancement in technology, coupled with the increased use of e-commerce in our daily lives will make the company’s application popular. This system will help customers to reduce the time they spend shopping for gas, which will make them install and use the company’s system.
Currently, there is affordable and available technology that can use the company’s application. The company’s application will run on all Android, Windows, and Apple phones. The ease of installing of the application will make it popular among various customers.
The use of the application will be environmentally friendly. Customers will save the energy used when they are searching for a gas supplier. Additionally, gas is a cleaner alternative source of energy when compared to kerosene or firewood.
The operations of LPG Delivery Inc. will be legal. The company will follow all the legal requirements needed to establish a delivery company. Additionally, it will always pay its statutory dues and taxes.
LPG Delivery Inc. will use concentrated marketing strategy. In this method, the company will create adverts that target specific regions of its operations. Since the company will be operating in many regions in the country, it will consider the cultural variations and income levels of each area. In parts of the country where people have low incomes, the company will focus on the advertisement of the delivery of small cylinders gas, whereas in more wealthy regions, it will promote the sale of large gas cylinders. Additionally, the company will consider the differences in the languages of different people. Many towns in the UAE are multi-ethnic. Cities such as Dubai, which have attracted a lot of foreigners are multicultural. Therefore, the company will have advertisements done in Arabic, English, French, Spanish, German, and Portuguese, and will be aired in public media broadcasting these languages.
LPG Delivery Inc. will have different independent departments that will help it in its operations. Each of these departments will have a manager who will form strategies and decisions for its operations. The strategies made by the departments will make them competitive by enabling them to easily counter challenges in the market. Importantly, these managers will assist CEOs in making various decisions and strategies for the company. The company will have managers for finance, human resource, and information communication technology department.
For the company to achieve its strategic objectives, it will need skillful marketers, competent engineers, and creative and diligent managers. The marketers will aggressively market the company’s app in their regions. Engineers, on the other hand, will be involved in the development of the company’s mobile phone application. Finally, LPG Delivery Inc. management will establish appropriate policies and strategies.
Since the LPG Delivery Inc. is a new business, it will have to look for ways that it can get affordable and a lot of capital for its operations. The main methods that it can use to obtain capital are: the use of shareholders’ funds, getting finances from angel investors, and use of a bank loan. Each of these methods has its advantages and disadvantages.
The company can ask its current shareholders to raise more capital for the business. This strategy is appropriate since the current owners still retain their share of the business. However, if they are unable to raise more capital, the company can decide to become a public company and issue new ordinary shares through an initial public offering (IPO) or by selling preference shares. The main challenge with using shareholders is that the company may be forced to pay a lot of dividend to its new ordinary and preference shareholders (Daft, 2015, pp. 42).Additionally, the issuance of ordinary shares dilutes the ownership of the current shareholders.
LPG Delivery Inc. can also seek finance from angel investors. These investors are usually willing to offer capital even to a new organization if its business plan appears viable. Therefore, the company can use these individuals to get quick capital. The main challenge with using Angel investors is that they always want a share of the business. Also, they require to be involved in the decision-making process (Daft, 2015, pp. 44).
LPG Delivery Inc. can also get a bank loan. Some investment banks are always willing to invest in a new business if it has a proper business plan and an organized management. The main challenge with this method is that the company may get a very small loans since it is a new business and it does not have collateral (Daft, 2015, pp. 43). Additionally, it may be charged a high-interest rate on its loan due to the high risk of lending to a new and unknown customer.
Daft, R 2015, Management, 12th edn, South-Western College Pub., New York.
Denehey, D 2011, Fundamentals of petroleum, 5th edn, PETEX, Austin.
Wheelen, T., Hunger, D., Hoffman, A., & Bamford, C 2014, Strategic management and business policy: Globalization, innovation, and sustainability, 14th edn, Pearson, London.