Why a Company Has to Invest on Product and Business Development

The top management is always scared of spending money if they don’t see the business potential. In other scenario they are quick to approve the business proposal that shows beautiful financial figure and fast ROI. Unfortunately some CEOs flare up beautiful figures without substantiating them with facts. However, I think we need some flexibility on case-to-case basis as some businesses need the company to spend first to gain later on.

In the case of automotive companies, the strategic intent and goal for putting forward any business proposal is to carry out the sales mission, so that at the end of the day the company has enough stock and that it has developed all the right variants for the market.

I find it very important to highlight the insight of Government business, its pains and gains, the possible huge stock commitment and the inventory that the company must carry that often being questioned by the management. Generally, the company is very reluctant to invest when its cash flow is tie down for pretty long time. If our financial aim is to do a sales of 700 units per year (depending on what kind of products) or PBUIIT of RM 11 mil and steadily increasing the PBT by 20% in Year 2 and Year 3 through relentless sales effort, sales expansion programs, improved customers service and creative marketing strategies, I think the management is ever willing to consider for such proposal.

Regardless of the economic environment and the financial constraints, a pro-active and dynamic company must continue to invest in development projects that support specific business goals and that can generate steady Return on Fund Employed.

As part of the ongoing action plan there is a need to improve the production performance to be able to deliver customer orders in time besides improving customer services and our very own attitude towards the company and the products we represent.

Though some government plans are transparent to the public, many more are categorized as classified. I don’t blame the government officers for that as they are doing their job. They are maintaining their work etiquette and integrity. What I can deduce here is that government business processes especially those involving capital asset, defence, security, safety and enforcement is tedious and slow. Continuous and regular update on purchase plan is vital to keep enough stock for the customers. Political and economic changes in the country have an implication to local business. Thus, intelligent interpretations of the political climate and the market situation are of paramount importance to be able to sustain the business on correct footing.

A new military product or its variant is best developed after a thorough market study or survey. It cannot be based on gut feeling, personal ability or your merely good relation with the principal or supplier. A desirable product must be born as a result of technical collaboration with users, technical team and policy makers. Of course, there are other product and test protocols that need to be complied with. As I mentioned in my earlier post, once a product or its variant is identified to be required by the customer, the company has the business obligation to get the prototypes ready for evaluation or risk losing them to competitors. Endurance to this kind of calculated risk is unavoidable to be able to enjoy the future privilege of direct purchase. Having done all the preliminary ground work it is proper to start developing the identified variants, according to the planned schedules, in order to hit the business target one has highly aspired to meet.

The proposed development and production of prototype is purely dynamic initiative undertaken by the business or product development team in collaboration with principal and vendors and it takes into consideration the end-users’ inputs and the impending business need. In the case of defence product, the industry player has a serious commitment to help upgrade military combat readiness and to revive end-users’ interest. Essentially, the plan done by the industry player is two-pronged that will benefit the customers and the company. It will benefit the Arm Forces such as, in term of saving in R&D which is solely borne by the company. The company and its vendors will impart their knowledge in engineering design and turning concept into reality.

Next step is marketing. The marketing strategies are applicable for both the government and corporate worlds and they serve as guidelines towards the direction the company is heading.

Like in most other companies, Government Sales is a special unit that handles matters related to Government’s new vehicle purchases, vehicle after sales issues, tenders and customers training. Sales of vehicles and parts to the government have been a significant revenue contributor to vehicle suppliers. Company like Weststar is not an exception. The company, for example had its first maintenance service and parts contract in 2009. Sales of parts, service, labour or vehicles exceeding a specific ceiling, into the government sector have been subject to tender exercise and Weststar has vast experience on this exercise.

Weststar needs to go on with the product development. Avoiding risks also means losing out on the potential gain that accepting (retaining) the risk may have allowed. Not entering a business to avoid the risk of loss also avoids the possibility of earning the profits.

About westpro's Blog

Golfer, traveller, charity worker, blogger, gardener, housekeeper. Email to zyedhassan@gmail.com for further information.
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