Dominion Resources Incorporated
IV. Planned Operation of Dominion Resources Incorporated’s South African Operations
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- Employee Heirarchy Chart: Position
- IV. Planned Operation of Dominion Resources Incorporated’s South African Operations
- Amount of Electricity Used Price [in South African Rand (R)]
- Gross Income
- Total Expenses
- Total Current Liabilities 7,095,260
- Total Current Assets 7,020,967
- Total Long-Term Liabilities 20,851,307
- Total Net Fixed Assets 22,149,204
- Total Shareholders Equity 232,092
- Total Assets 29,170,171
- Projected 3-Year Finances for Dominion Resources Inc. (in Rand)
- Gross Income 48,831,771 56,190,269
- Total Expenses 49,151,749 46,725,226
- 9,465,043 17,638,686 V. Bibliography
IV. Planned Operation of Dominion Resources Incorporated’s South African Operations Section A As Dominion Resources Incorporated is established in South Africa, it will be legally incorporated as a limited liability corporation. This type of business combines the best aspects of a closed corporation and a proprietorship in South Africa. It divides its liquid capital assets to be distributed to public shareholders or to be sold to just a handful of key investors that possess close relationships with the company. A Limited Liability structure is also advantageous in that Dominion will have the ability to sell these shares of stock to raise capital for itself, while the shareholders will have minimal autonomy when it comes to governing company processes. The advantages of this operational style also translate into diminutive costs when it comes to filing documents and paying corporate taxes. To top it all off, only a very short process will be necessary to legally establish a limited liability company in South Africa, with steps including reserving a business name with the Registrar of Companies and paying pertinent fees, documenting company information with the government’s CIPRO agency in Pretoria, declaring assets and funds for taxation purposes with the local government (Receiver of Revenue), and completing registration with the governmental agency for Compensations for Occupational Injuries and Disease Act. The increasingly-urgent energy crisis has led the South African government to elicit private investment in its energy grid in order to alleviate current strains on its systems. Given the current economic incentives provided by the government, Dominion Resources will be eligible for many tax write-offs and refunds for aspects of the business, including write-offs for proportional expenses pertinent to company reinvestment and payouts to employees. Dominion will also qualify for numerous government-subsidized tax rates and low-rate interest fees including a 20% reduction of Dominion’s tax rates during its first few years of its operations in South Africa. In addition, due to South Africa’s relatively high national unemployment rates, the government has instituted a free program to match qualified employees with potential employers, creating easy access to qualified labor that will be needed to run our proposed power plant and corporate offices. Although not directly employed by our company, we will need contractors, designers, and construction teams to actually build the proposed power generation facility outside of Johannesburg. We will partner with companies experienced in high-technology construction and design such as Concor Incorporated, a top-100 company in South Africa. Once constructed, the operation of our proposed power generation facility will involve the utilization of a “grate incinerator system;” a fairly-complicated incineration process that, to run, will require a number of employees at various levels of the workplace hierarchy from equipment technicians to upper management-level employees and plant managers. In addition to employees at the actual power generation facility, we will also require staff at our corporate office location in the central business district of Johannesburg. The necessary employee hierarchy and their job descriptions pertinent to both the power plant and corporate office are delineated in the following charts: Employee Heirarchy Chart:
IV. Planned Operation of Dominion Resources Incorporated’s South African Operations Section B As an energy company, Dominion Resources Incorporated’s South African arm will provide one product; electrical energy. This electrical energy will be produced in our proposed power generation facility in Johannesburg’s outer district of Melville in Gauteng Province. This electricity, a proposed generation capacity of 359 MW, will be produced via a direct combustion of biomass waste that results from grate incinerator systems. In essence, the process of direct combustion creates electrical energy through the creation of steam which is able to force a turbine into motion inside the field of an electromagnet. The motion of the turbine itself in the electromagnetic field is what produces the electricity. The grate incinerator system will provide for the clean, efficient burning of biomass to produce this steam, and subsequent electricity trough the following steps:
In conjunction with our factory operations, we also plan on establishing a corporate office presence in the central business district of Johannesburg. This office location will be responsible for administering an array of clerical duties, including processing and monitoring electricity bill balances, payments, and usage levels from our company’s consumers. They’ll also send out direct mail promotional fliers in addition to managing official communications on behalf of Dominion Resources Incorporated’s South African operations branch, whether these communications are with the parent corporation in the United States or with some other entity. A third task that will be required of office personnel will be to manage the oversight of the grounds of the electrical generation facility. In managing the power plant, they will be responsible for scheduling inspections by governmental agencies and processing expenses required to finance upgrades and repairs. In transplanting the business, we will keep importing and exporting to a minimum. The electrical storage cells that will be used to stow away electrical current produced by the power plant will be bought as capital goods from an external manufacturer in South Africa and operated by our own personnel. As needed, these energy cells will distribute previously-stored electrical current through the electrical grid in order to satisfy customer demand across our region of coverage. In terms of electrical distribution infrastructure, South Africa already has a fairly-comprehensive power grid that’s capable of reaching the vast majority of customers, so minimal construction efforts will be needed only to connect the proposed power plant to existing infrastructure via high-tension power lines. Very few other capital goods will need to be imported or exported from the United States into South Africa. If any, such capital goods may include high-technology items such as highly-polarized magnetic materials in conjunction with other factory components and construction effects. In order to legally import these capital goods, we’ll be required by the South African government to obtain special import provision licenses in addition to paying pertinent tariffs and fees associated with import permit holders. We’ll also need commerce invoices, Bills of Lading, insurance documentation, and packing lists for each import shipment in compliance with the South African Foreign Trade Organization and its related monitoring government agencies. We will transfer an array of current Dominion employees to its new South African location to assist in training personnel and running the power plant when it first comes online. These employees will be transferred back home after a period of 3 years, when training and development are complete, although high-level employees will remain.
Section C Dominion Resources Incorporated plans to implement a penetration pricing strategy, defined as one that offers a high-quality, premium product or service at a low price in order to quickly gain market share in an area. This pricing strategy will be integral to our business growth model as the current industry leader, South Africa’s government-backed Eskom company, begins to phase out its operations due to its precipitous losses of public funds through its operations and ineffective efforts to keep up with domestic electricity demand. As a result of its poor performance, the Eskom company is in the process of being scaled back in favor of a more productive and efficient free-enterprise system of electricity production in South Africa. Dominion Resources Incorporated will set fair, competitive prices in order to afford the luxury of electricity to as wide a variety of consumers as possible; from powering governmental operations to providing energy for high-intensity manufacturing and private uses. We will place somewhat of an emphasis on driving growth in electricity usage for the lower middle class; those who have most recently moved above South Africa’s poverty line, as South Africa continues its exponential economic growth and advancement. We’ll target these consumers, in both private and small business-based electricity consumption, as a way to integrate Dominion into the country’s economic solidification. As the local currency is the South African Rand, all prices, costs, and financial information will be reflected in this currency, which has an exchange rate of 1 United States Dollar for every 6.85 South African Rands. To keep our prices competitive against any competition, we have devised an innovative system of penetration pricing which we’ve dubbed the Bracket System for the pricing of electricity that will create cost-effective and profit maximizing ways to bill consumers for their electricity use. The Bracket System will set divisive ranges of prices (based upon a rate of .65 Rand per kilowatt hour) for electricity between certain monthly usage ranges (measured in kilowatt hours). These divisive prices will be computed using the following formula: [(wattage utilized x hours used) ÷ 1000 ] x .65 = cost of bill. We will not charge any peak-hour rates or usage fees in our pricing system, as opposed to our competition. The proposed bracket system will simplify the process of determining prices for each unique electricity purchaser, lowering the necessity for a large amount of billing and usage management personnel and thus decreasing the costs of managing this division of the company’s operations. This system will give us a competitive advantage over our competitors, like the Eskom company, which use complicated pricing formulas that charge unpredictably-high rates during peak usage hours and stagnate at other points during the day. These peak-hour charges are often frustrating and unfair to consumers. Pricing for our electricity will be determined by a comprehensive set of expenses which the company will have to incur including for labor, power facility maintenance expenses, costs of capital goods, and the transporting of biomass in conjunction with annual rates of taxation imposed by the government. As these cost burdens fluctuate, our prices will change proportionally. The factor of competition in the South African electricity industry will be kept to a minimum as our main competitor, Eskom, will be phased out upon our entry into the market, although several small companies will compete with us. Our simplified Bracket pricing system’s specific pricing levels are delineated in the chart below:
Amount *based upon the amount of kilowatt hours (kWh) of electricity that the customer uses Self-promotion is integral for a business, as it is the medium by which it annunciates its existence and communicates with potential and existing customers. In order to most effectively and efficiently deploy advertising and public relations campaigns, Dominion Resources Incorporated’s South African Operations will utilize campaigns that are geared towards the primary and secondary target markets delineated in part III section B. We’ll unfold a three-pronged advertising plan utilizing both print and digital media in conjunction with outdoor advertising. This advertising campaign will be used to increase public awareness of our existence in addition to succinctly explaining why our company beats the competition in terms of pricing and environmentally-friendly policies. Digital media will make up roughly 50% of our initial advertising budget. The current number of televisions per capita in South Africa is about 135 per 1,000 people and this rate is reciprocated in the Johannesburg area; our primary region of coverage. This rate is low; ranked as the 114th country with the most televisions per person. Due to this fact, we will utilize a smaller-than-average television advertising campaign. We’ll initially incorporate 68,000 Rand for this section of our advertising budget, but will gradually increase this value to 102,000 Rand, an increase of 50%, by the 5th year of operation in South Africa as personal incomes continue to increase and proliferation of televisions continues to become more common. These TV advertisements will be placed during primetime programming on major Johannesburg TV stations like SABC1, the South African Broadcasting Corporation’s flagship station, and on others such as MNet and ETV. Utilization of radio media will also be used on area stations like SABC and 5FM, which have large audiences that rival those of the country’s television shows. Thus, we’ll appropriate 54,000 Rand for radio advertising operations. As internet is a growing advertising niche worldwide, we’ll also incorporate it into our initial advertising campaign. Computer use in South Africa is not very common, but it is utilized by the wealthy and major business operators; two major users of electricity. For website and internet banners, we’ll set aside 34,000 Rand. Print media, including magazines, will make up 40% of our initial advertising budget. We will place advertisements in Johannesburg-area magazines, like South Lifestyle Magazine and the Wits Business Journal, and in newspapers like the Sunday Times. For these print advertisements, 80,000 Rand will be appropriated. In addition to print advertisements, we will utilize a direct mail campaign to reach private and corporate consumers. We will send specialized advertisements and discount vouchers that explain what makes us different from the competition to selected consumers and businesses to draw in customers and expand our market share with subsequent word-of-mouth advertising. For direct mail, known to be the most expensive form of advertising on a per-customer reached basis, we’ll procure 60,000 rand. We will utilize public relations campaigns, mostly via print media, to not only spread awareness of our company, but also to advertise the environmentally-friendly and socially-responsible image that we exemplify with our clean energy production, fair pricing, and egalitarian personnel management policies. We will issue press releases when sponsoring charity or related campaigns and events in addition to possibly founding our own events and campaigns to benefit the citizens who we supply with electricity. Finally, outdoor advertising will make up the third component of our comprehensive advertising scheme, comprising the final 10% of our advertising budget. We will place billboard advertisements in dense areas, such as Fitzgerald Square in downtown Johannesburg, and on widely-used transport vehicles and infrastructure, such as buses and subway stations. In addition, billboard and ad space will be bought in proximity to public institutions, such as at the famed Soccer City Stadium during soccer games; extremely-popular social events. We’ll buy billboard space in varied capacities around the city and the greater Gauteng province to spread awareness of our company to the masses.
We believe that the aforementioned plan for the transplantation of Dominion Resources Incorporated to South Africa has many strengths, and subsequently will have many opportunities for success in the South African energy market when it’s transplanted to the outskirts of Johannesburg. However, very minor threats and individual company weaknesses may have some impact on the business. These strengths, weaknesses, opportunities, and threats are analyzed in the SWOT analysis chart below: V. Planned Financing Section A
V. Planned Financing Section C Dominion Resources Incorporated’s main avenue of expansion will occur once the company creates a firm imprint in the energy sector of South Africa. As a result of extensive self-promotion campaigns in the previously-mentioned promotion plan, the company will become well-known within the Johannesburg business scene, as many companies, enterprises, and families will rely on us for fairly-priced, reliable electricity. As public perception of the business becomes more measurable over the course of our first and second years in operation, public-relations campaigns and intensified advertising promotion strategies, will take effect. These campaigns will be anchored by charitable contributions to varied agencies in South Africa to promote a positive external perception of the company in conjunction with continual market segmentation analysis to make our promotional plan as effective at reaching consumers as possible. By the end of the second year’s operations, these enhancements in public relations will yield an ever-growing list of retainable clients, and an increased threshold of demand for Dominion’s electrical power generation and distribution services. After three years and into the future, as profit margins rise and the effects of expenses such as construction payments and initial loans begin to decrease, the company will begin to reinvest in itself. Once this point is reached, the business, given overall profitability and appropriate domestic fiscal conditions, may expand the size of the proposed power plant in Johannesburg to provide additional output capacity, or it may even consider developing probing commissions to look into opening new power generation facilities or hiring additional staff at leased office spaces. These plans for future growth will require resources. For one, capital and monetary investment from profit yields will need to be secured in order to finance a second power plant venture, and to finance additional expansions in personnel and office space. This capital will come from stock income, profit from the proposed Johannesburg power generation location, and lines of credit. This capital will also be used in the short term to pay for additional company demand for office supplies, upgraded equipment purchases necessary for efficient power generation, and other necessary expenditure needs.
V. Bibliography "AfDB Helps South Africa Tackle Energy Crisis-Approves €1.86 Billion Loan." African Development Bank, 26 Nov. 2009. Web. 15 Oct. 2010. "Biomass Fuel - The Basics of Biomass Fuel." Alternative Energy Resources. 2010. Web. 16 Dec. 2010. “Dominion Resources, Inc.” Forbes, 2010. nfo/CIAtAGlance.jsp?tkr=D>.
"Dominion Resources, Inc. Financials." Hoovers | Business Solutions from Hoovers. Hoover Inc., 2010. Web. 15 Oct. 2010. “Government At Fault in South African Energy Crisis” The Washington Post, February 2009.
Machariaa, James. “South Africa Still Faces Major Energy Crisis.” Reuters, 2 Apr. 2009. "South Africa Energy." Statistics South Africa - Home. 30 Nov. 2009. Web. 15 Oct. 2010. "South Africa's Energy Industry - SouthAfrica.info." South Africa's Official Gateway - Investment, Travel, Country Information - SouthAfrica.info. 2006. Web. 28 Oct. 2010. “South Africa Invited to Join BRIC Group.” Reuters,24 Dec. 2010. "South Africa's Trade Relations - SouthAfrica.info." South Africa's Official Gateway - Investment, Travel, Country Information - SouthAfrica.info. SouthAfrica.info Reporter, 2010. Web. 15 Oct. 2010. <http://www.southafrica.info>.
"The World Factbook - South Africa." Central Intelligence Agency. Central Intelligence Agency, 29 Sept. 2010. Web. 27 Sept. 2010. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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