Executive summary

The company "IQ PRODUCTS" assembles "smart" microwave ovens, which are equipped in special cooking programs. We are producing bowls made of glass and they have hi-tech chips inside. Moreover, those chips are integrated with microwave control system. Our system can be compatible with almost every type of microwave. We decided to purchase every components of microwave for example:

• turntable support,

• touch screen,

• cover,

• electric engine,

• fanning system.

We would like to explain why our micro is special and innovate. In other microwaves if you want to heat up something you have to set the right program by yourself. In our microwave the special sensors inside scan the chip in which will be equipped the box made of glass and the program set automatically. In this time you can relax and do something else, not worrying about your meal. Our firm is situated in Psia Wólka, about 10 kilometers from Łódź.

Analyzing the environment, we conclude that the most adverse factors are derived from the economic and the best from the social. Our main target are modern people who have no time and prefer instant cooking. IQ Microwave would be directed to well developed countries such as: USA, Canada and West European countries.

Vision and rationale

Microwave ovens are very popular for reheating previously-cooked foods and cooking vegetables. They are also useful for rapid heating of otherwise slowly-prepared cooking items, such as hot butter and fats, and melted chocolate. We have a vision to create an intelligent and innovate microwave oven, with special chips and sensors. The main advantage of using the microwaves is that the process of heating food is quickly and efficiently. We are producing bowls made of glass and they have hi-tech chips inside. Moreover, those chips are integrated with microwave control system. Our system can be compatible with almost every type of microwave. Almost in every house we can find a microwave. Probably you will ask: „Why your microwave is special? Why a bowl made of glass with chip can afford a better life?”. So we will try to discuss this problem and explain how our hardware is made. In our microwave the special sensors inside scan the chip in which will be equipped the bowl made of glass and the program set automatically. In this time you can relax and do something else, not worrying about your meal.

Background

Those days are crazy, people don’t have too much time. The primary reason to start a project “IQ Microwave” is lack of time in our life. We are using microwave to save our very precious time (dielectric heating, used is microwave is unhealthy, but what in 21^st century is healthy?). Using our hardware you can save a lot more time, than using standard oven. We did a little survey in our project group. We asked a question: “Would you buy something, that can save your time, about 10-15 minutes daily?”

Table 1. Number of women and men in our group.

Table 2. Our survey and answers.

Maybe this survey isn’t very reliable (only 7 people were examined), but the results only helped us to decide to start this project.

Company goals

The “IQ Microwave” had to lay down several goals as it went through the various stages of product production, manufacturing and marketing processes.

• Enter the market with a new type of product.

• Maximize customer satisfaction, this the main goal that we want to achieve.

• Launch a “boom” for this type of microwaves. We want to enter a variety kind of market f.e. Western Europe, USA and Canada.

• Growth of the company at 10% per year. Expansion of the company building, hire new labor, start production in two more places.

• Start a delivering system of our product. We would like to distribute and deliver our hardware almost every place on our globe in very efficient time.

• Gain profits of 20% every year, we could achieve that by making a profit about 15-20$ per item.

Strategies to achieve the goals

We would like to present our strategy using the Product/Market Ansoff matrix.

Table 3. Product/Market Ansoff matrix.

Our strategy is called „L”. First our step is to penetrate the market with our product. It is defined as the number of people who buy a specific brand or a category of goods at least once in a given period, divided by the size of the relevant market population. Next step is “Market development”. We would like to target customers in new segments. Market development strategy entails expanding the potential market through new users or new uses. New users can be defined as: new geographic segments, new demographic segments, new institutional segments or new psychographic segments. We would like to gain new customers in USA and Canada, by starting a campaign there. Last step is “Diversification”. It seeks to increase profitability through greater sales volume obtained from new products and new markets. We would like to start a cooperation with firms such as Samsung or Sony, which would help to develop our manufacture process. In the future our firm will buy patents from Bosch and we will start to produce the whole microwave, not only the chips and bowls.

The product

At the beginning each and every person in the team had his or her own ideas about how the our product would look like. After many hours we decided to produce modern microwave because people knows about touched-screens or TV sets which reacting on human voice from view years. As you know in the normal microwave if you want to heat up something you have to set the right program by yourself. Why our microwave is different and modern? It is simply. When you will be hungry just put the meal into microwave and the special sensors inside scan the chip in which will be equipped the box made of glass and the program set automatically. In this time you can relax and do something else, not worrying about your meal.

Manufacturing System and Production

We outsource every components to make our IQ microwave from other suppliers who make those components and supply them to companies which are manufacturers of microwaves. We put together supplied components to construct device and insert our glass bowl and chips which we produce by ourselves. We decided to outsource everything except those mentioned things, because is cheaper to us to supply components not to manufacture them. For example:

• TURNTABLE SUPPORT - this thing is produce from heat - resistant glass - this kind of glass have higher mechanical strength and greater resistance to surface temperature difference. Obtained by subjecting ordinary glass suitable heat treatment involving heating to a temperature of 680 - 720^o C and very fast cooling with compressed air (heat treatment temperature + time "baking" and the cooling time depends on the kind of glass). For this reason is creating microstructure - this microstructure is build from a very regular network of small crystals separated by small - domain silica amorphous phase.

• TOUCH SCREEN - our control panel is equipped with the screen which is touch - sensitive plate. Touching by finger disturbs weak electric field and electronics calculates the position of finger. Like many of capacitive touch screens support is only possible with a naked finger - touch screen does not recognize the contact with object or glove.

• COVER - is making by two ways. The first method is the injection plastics such as polycarbonate or ABS. The second method is based on the cutting sheet of metal and then bending and welding it.

• ELECTRIC ENGINE - the engine consist of:

• brushes - which supply power to the motor

• commutators - which change the direction of power flow in the frame

• magnets - which produce a magnetic field necessary for launching a frame in motion

• rotor (frames) - providing a current it is this part of the engine is propelled

• FAN - compressor in which increase the static pressure of the gas is minimal (less than13 kPa), and all the energy of the gas is contained in the kinetic component.

As we mentioned before, we produce special bowls which are connected with microwave. Below there is the manufacturing process of glass bowls with electronic chips.

The basic raw materials for glass bowl are sand, soda (fluxes) and limestone (stabilizer), clarifying agents, coloring agents, raw materials Macaca glass, other materials (eg broken glass). In the process of manufacturing glass, liquid glass at about 1100^o C is poured continuously from the furnace into a large tub filled with liquid tin. Glass is poured out on the tin covering the surface evenly. The thickness of float glass is controlled by regulating the speed at which a stream of freezing slowly move the glass after surface of bowl. After going about 120 meters through the cooling tunnel, float glass reaches the figure of a continuous "ribbon" of glass and room temperature. The product is perfectly flat and its surfaces are almost perfectly parallel. The edges of the product are compensated by an automatic knife.

Producing of processor (chip):

1. Production of silicon crystal. First melt a special quartz sand. The mass of the melt, in a special device created a large cylinder called a monolithic silicon crystal.

2. Plunge into slices. After cooling the block goes to the blade, where it is cut into 0.9 mm slices (wafers). Then the wafers are cleaned and replaced at this stage of a perfectly smooth surface.

3. Application circuits. The sterile semiconductor factory for example the manufacturer of Intel in many processes of exposure and etching circuits are applied, then the wafer is again cleaned.

4. Control processor. The processors are subject to sampling waflu yet. Employees check the wafer under a microscope, using a special test apparatus.

5. Assembly in the housing. The silicon slices cut processors and put them in enclosures. At the bottom of the enclosure has hundreds of contacts.

Now is the time to say something about the place where will be our company located. Our country like many others countries is placed in European Union, so for this reason we can count on the support of Union for example some amount of money for production facility. More over in Poland are special industrial zones. One of them is the Łódź industrial district where we decided to put our production facility. On our selection had an impact of several factors for example: free space under our company, industrialization of this area, level of unemployment, transport condition and tax relief. The Łódź industrial district satisfies all of these factors. Firstly on this area work a couple of consortium which are producing machines for example Phillips, Bosh and Siemens, so we can cooperate with them and receive production machines for smaller amount of money. Secondly when we produce our products we have the opportunity to quickly transport them to consumers because two highways (A1 and A2) runs by district. According to the statistics the level of unemployment in February was 13,5% and most of unemployed are people with higher education, so we can hire them. Finally if we create our company we will get few percent relief (5%) on PIT and CIT tax.

Marketing and Delivery

Market analysis:

1. Market segmentation

1. Geographic segmentation – we produce microwaves in Poland, but the distribution includes countries such as Germany and United Kingdom.

2. Demographic segmentation - our products will find buyers mainly from the age range 15-65 years, and for this age group we guided microwaves. These will mainly be those with incomes above 350 €.

3. Segmentation by psychographic traits - people prefer modern life and physically active. They are also people who do not have too much time to prepare meals

Table 5. Market segmentation for our IQ Microwave.

Environment analysis:

Analysis of the environment of our company, taking into account the factors of micro-
and macro-environment. Macro-environment includes aspects of political, social, economic, legal and technical. Micro-environment is called Porter's Five Forces.

Marco-environment:

• Political aspects - our company will prosper in the country,
  where there is a democratic system, therefore, power is exercised by a body elected by universal suffrage. None of the above-mentioned countries is not at war with another country. This makes the economic stability in these countries, and thus an increased demand for electronic devices. What's more, Germany and United Kingdom are the EU member states. This allows the export of products to those countries not burdened by additional costs, for example, the duty applies.

• Social aspects - in each member education among the population is at a different level. Approximately 37% of the total have higher education. National society is mainly an aging society in which population growth is -2‰ in Germany and 3‰ in UK. Average life expectancy in these countries is between 77 - 79 years. As for unemployment, it is on the level of 5% to 10%.

• Economic Aspects - consist mainly of natural resources in these countries. In this category excels by far the Russian Federation, which has extensive deposits including oil, natural gas, gold, platinum and uranium.

• Legal aspects - in all countries have human rights.

Table 6. Analysis of macro factors with weights and individual assessments.

Group of factors	Factors	Weight	Rate	Score
Economic	high rate of business in our market	3	2	6
	high unemployment rate	1	2	2
	precarious economic situation in Europe	-3	3	-9
	lack of favorable loans	-1	1	-1
Politico - legal	antitrust	2	3	6
	provisions for the protection of patents, licenses	1	2	2
	stringent environmental regulations	-2	1	-2
	tax laws	-2	3	-6
Social	greater number of educated people	2	2	4
	more people wealthy	3	2	6
	tendency of society to take credit	2	2	4
	creating a new quality of life (fashion)	2	1	2
	large amount of advertising and marketing activities	1	1	1
	low birth rate	-2	3	-6
	"aging" population of developed countries	-1	2	-2
Technological	progressive automation	2	3	6
	shortening technology life-cycle	3	2	6
	high pace of technological change	-3	3	-9
	changing trends in the electronics industry	-2	3	-6
			Sum 4

Conclusions: The analysis of macro shows that among the most turbulent economic factors are uncertain economic situation in Europe. The next most unfavorable factor is the high pace of technological change, which may result in the near future, our products are technologically outdated and just not vogue. The most favorable factor for the sphere of our business is the social sphere.

Micro-environment (Porter's analysis):

• The impact of competition - LARGE:

1. Competitors are a recognized brand (Samsung, Bosh, LG, Zelmer, Mastercook).
2. Competitors are at a sustainable level technology.
3. No significant differences in the products.
• The impact of supplier - SMALL:
1. Many suppliers of raw materials is proposed in a similar price.
2. The high competition among providers of what is good for our company.
• The impact of customers - LARGE:
1. Consumers demand increases.
2. A large number of competitive offers in the market.
• Competition within the sector - LARGE
• Threat of substitutes appearance - SMALL:
1. A small number of cheaper substitutes based on inferior components.
2. The quality of substitutes must be at least equal to the normal

Barriers to entry on the market:
• Economies of scale: Large investments in order to obtain raw materials, patents, technology and skilled workers.
• Featured product: Customers who use our services rather
are accustomed to a particular brand.
• Capital requirement: The high cost of setting up a company - warehouse, production halls, consumer trust, brand image, advertising.
• Components, Raw Materials: The required large number of components and raw materials for production of electronic equipment.
• Little experience in moving the market
• Focus on the selected segment.

Barriers to exit from the market:
• The need to reduce large investments.
• The resulting prestige brand.
• Good governance.
• Trapped electronic equipment.
• Contracts with suppliers, retailers.
• Loss of technology patents and innovative solutions.
• Decommissioning costs of advertising due to previous commitments of suppliers, employees and customers.

After analyzing the barriers to entry and exit from the market shows that our case is a very risky venture. We argue, however, that interest is generally good intentions and can permanently remain on the Polish market.

1. Growth potential and risks in target markets (SWOT Analysis)

Table 7. SWOT analysis for IQ product.

Strengths	Weaknesses
× High quality products. × Modern production lines. × Strong links with suppliers. × Good location of the company. × High qualifications of staff. × Increasing the range of products such as introduction of a new device.	× At the moment, a small market share. × Inadequate knowledge of the brand by consumers. × The high price of the product (in comparison with the objects of everyday use). × The high costs of maintenance personnel. × A small selection of products
Opportunities	Threats
× Schengen Zone - no duties for the carriage of goods. × The possibility of funding from the European Union. × Ease of obtaining employees with specialized knowledge. × The large potential market for electronic equipment. × Availability of raw materials.	× The decline in purchasing power by the society. × A large reduction in the price pressure from customers and as a result of competition activity. × The innovative new product released by the competition. × The increase in customer requirements. × Instability in exchange rates. × The economic crisis

1. Marketing channels, including use of the web and information technology in marketing and responding to customers.

The process of creating an advertising campaign in the schema 6M:

• The target group for this promotion will be people in the age group 15-65 years.
• Our goal is to foster and promote our products.
• Advertising slogan: "IQ - Innovation and Technology"
• The major media is TV, radio, Internet, local newspapers, magazines, advertising leaflets.
• Price for television advertising at peak ranges
6000-9000 zł, advertising on major portals - 35 zł for 1000 emissions, create a website - 800 zł. The total cost of our advertising campaign to ± 150 000 zł.

• For effectiveness to our promotion, advertising contract negotiated in TVP and Polsat television. We also intend to advertise our products on popular web portals such as Onet and WP.

Advertising ATL: advertising through mass media: We will have advertising
in television TVP and Polsat television - more people can find out about our products. We are planning to buy ads on radio broadcasts.

Complementary media ATL:
• Internet: the official website of our company and advertising on social networking sites such as Facebook. Advertisements sent to the e-mails largest Internet portals.

BTL advertising: advertising not using mass media
• Leaflets dispersed and distributed to mailboxes on the street.
• Press announcement-only.
• Advertising space in newspapers for example.

Sales Promotion:
• Consumer (lower prices).
• 10% discount when ordering through our website.

Direct Promotion:
• Direct mail: E-mail advertising.
• Hotline: specially trained staff will provide answers to any persistent question about our products.
• Stand on the MTP.

External PR:
• Interviews with authorities or employees.
• Sponsorship - our company will seek to sponsor sports competitions for children.

PR inside:
• Provide training and delegation.
• All information regarding changes in the company will be distributed to company email and posted on a public board in the workplace.
• Incentive bonuses for top employees.
• Organize team building for employees.

1. Delivery methods

Distribution of our products will be made ​​directly to the designated stores such as Media Markt, Media Expert.

Flow Chart 1. The method of delivery IQ Microwaves.

Number of intermediaries - direct.
The number of intermediate levels - short.
Channel width - narrow.
Types of stream flow - basic.
Nature of the relationship between participants in the channel - integrated.

We plan to introduce a selective distribution, which is offering a limited number of products purposely selected intermediaries. The corresponding distribution channels are narrower than in the intensive distribution strategy.

1. Sales of microwave ovens in Germany and United Kingdom.

Our calculations show that we have to produce about 20 000 microwaves the first month. We would like to enter the markets in Germany and United Kingdom.

We estimate that we can sell 250 000 items per year in German and UK. To shows that, it is possible, we present a diagram of the sale of microwave ovens in previous years, which appeared in International Journal of Research in Marketing (full reference at the end):

Chart 1. Sales of microwave owens in UK and Germany

Competetive Advantage

× Competition

Our competition could be companies which are offer similar products. For example:

• Grill: Panasonic NN-GD371SBPQ

Picture 1. Inverter Microwave Oven with Grill.

• Steam Cook: Samsung CE117AE-S

Picture 2. 100% Steam Cook with Pro-Steamer.

• Crisp function: Whirpool JT369

Picture 3. Jet-Chef Crisp, Grill & Convection.

× Our core competencies:

• Touch screen,

• Special cooking programs,

• Hi-tech product,

• Intelligent,

• Faster and more intuitive than other microwave oven,

• Convenient and intelligent.

Management and Organization of the Company

Our company employs 800 workers. The structure of the company was divided into appropriate departments which are managed by skilled managers. These departments are divides into tasks, and in this way we can distinguish the executive departments, which are specializing in the production and storage, administrative departments concerned with economics and administrative matters and technical department dealing with maintenance of the company.

The organizational structure that exists at the company is a kind of linear structure.

Organizational chart 1. Organizational structure of the company – organizational chart, created using AutoCAD.

Making decisions in the company

The CEO will oversee all of the major issues that advanced mechanics will be facing; all issues will be provided to him by the Managers. The president will make the final decision for any highly and very important decisions affecting the fate of the company. The managers will oversee all their departments and regulate what their employers have to do. The work of each department (unit) supervise a leader (foreman), who is subject to Chief Manager (e.g. Production Manager). The Chief Manager reports directly to CEO.

Size and profile of the workforce

As already mentioned, our company employs 800 workers, in this are 30 Managers, who are working at different levels of the company. Other workers are employed in the different departments, so they are very different. Therefore, we are working with leading specialists in high-tech department who engaged in the production of chips. In the production department, we employ the technical staff (such as glassmaking), who are specialized in manufacturing of glass processing. Similarly situation is in the maintenance department. There our company employ mechanics, electricians, who are good at their profession. In the department of design and testing, we employ creative and imaginative person. In the economic departments are working people who are familiar with the economics and administration. So the profile of our employee is determined by the department in which he is working. It is worth mentioning that all employees are hardworking, conscientious and have relevant experience for their position.

Cooperation with partnering companies

Production and assembly of everything takes a lot of workforce and a lot of time and space, transportation and management. Logically, the product cost will be higher. To reduce costs, housing and other basic elements of a microwave oven will be outsourced. The factory will make chips and a glass bowls. Outsourcing vendor can make the parts more precisely and efficiently. Their innovation, efficiency and experience are better than ours, because we do not have adequate background and experience. Outsourcing is a good way to save money. These elements are usually mass produced for example in China, which makes them cheaper than European counterparts. If these components are outsourced, the product will be more profitable. These components must be delivered just-in-time (when it is needed for assembly). However, in any case, we have warehouse of materials to guard against such strikes in China, or the failure of the ship.

Financial Plan

During the initial stage of the company, IQ Microwave Company will need a high

amount of funding of approximately $500 000 to build the production line and the base of company. A huge risk will be taken to promote and to sell the IQ Microwaves. If the sale is low, basically, the company will go in deficit. Considering the business strategy, explained earlier, and the risk with the wallet, the company will always try to improve, and hopefully, after the second or third year, the company will recover from all its losses. Therefore, to reduce the impact of the risk, 50% of the investments will be done by credit and the rest by cash. The rest of the amount, which is $250 000, will be counted on outside funding.

The funding will be based mainly on the following various sources:

• Bank loan (55%)-137,500

• Family support and friends (25%)-$64500

• Community futures (10%)-$25750

• Trade credits (10%)-$22250

The first $200000 will be used for:

• Production line (equipment, machine, and factory building)

• Rental transportation (trucks, and company’s cars)

• Advertisement (magazine, billboard, website, and TV)

• Company office rentals (office building).

• Raw materials

• Research fees

• Backup (for office equipment and crew’s business trip)

Table 8. The projected revenue

	Poland	Great Britain	Germany	sum
population	38 501 000	62 222 000	81 859 000	182 582 000
percentage	21,09%	34,08%	44,83%	100,00%
the amount of microwaves that we want to sell in one month	4 217	6 816	8 967	20 000
the amount of microwaves that we want to sell in six month	26359	42599	56042	125000
exchange rate	1 PLN	0,18 GBP	0,23 EUR
price of microwave	400 PLN	75 GBP	95 EUR
price of microwave in zł	400,00 zł	416,67 zł	413,04 zł
sales revenue in the six months	10 543 542,56 zł	17 749 467,20 zł	23 147 957,05 zł	51 440 966,81 zł

Table 9. Costs and benefits

	first month	the sixth month
maintenance of plant	500 000,00 zł	1 200 000,00 zł
maintenance of storage	200 000,00 zł	960 000,00 zł
delivery units	1 200 000,00 zł	7 500 000,00 zł
supply of raw materials	800 000,00 zł	5 000 000,00 zł
employees	3 000 000,00 zł	18 000 000,00 zł
delivery of finished products to warehouses	1 000 000,00 zł	6 000 000,00 zł
office administration	800 000,00 zł	4 800 000,00 zł
marketing	500 000,00 zł	3 000 000,00 zł
sum	8 000 000,00 zł	46 460 000,00 zł
profit	230 554,97 zł	4 980 966,81 zł

Summary

Our task was to create an innovative, modern and unusual product that would meet expectations of even the most demanding customers. We hope  that the intelligent microwave is a product which many people have been waiting for a long time and finally they can get it. IQ Microwaves reduces meal preparation time to a minimum, determined how much  time is need to heat the meal and that is why our product could be irreplaceable in the kitchen.

We outsource components to build microwaves form our suppliers (Bosch and Siemens). We can cooperate with them and receive production machines and also save more money, because costs of producing all components and higher than outsource them. We created a special chips in glass bowl that recognizes food and send signal to the control device, which itself sets the time and temperature of heating.

We have not met yet with this type of microwave, so we believe we will enjoy great popularity in the market. After analyzing the barriers to entry and exit from the market, it shows that our case is a very risky venture. But the most favorable factor from analysis of macro is the social sphere of our business. The high pace of technological change, which may result in the near future, making our products technologically outdated.

We would like to sell our products in Germany and United Kingdom at the beginning. If we find out that  products we make are popular and its sale increases, we will try to open on other European Countries, USA and Canada markets.

To sum up, we put a lot of work to create unusual, innovate product, just to meet customer needs. We hope, that analysis we made help us to hit the target markets, help us to develop company and of course IQ product.

Final Timeline and Task Assignments

Chart 2. Gantt chart

References (final list):

Books:

• Klenck, Thomas. "How It Works: Microwave Oven." Popular Mechanics. September, 1989, p. 78.

• Roman, Mark. "The Little Waves That Could." Discover. November, 1989, p. 54.

• Asimov, Isaac. How Did We Find Out About Microwaves? New York: Walker, 1989.

• Farley, Dixie. "Keeping Up with the Microwave Revolution." FDA Consumer, March 1990. pp. 24:17.

• Microwave-Enhanced Chemistry Fundamentals, Sample Preparation, and Applications; Kingston, H. M., Haswell, S. J., Eds.; American Chemical Society,: Washington, D.C., 1997.

• Introduction to Microwave Sample Preparation: Theory and Practice; Kingston, H. M., Jassie, L. B., Eds.; American Chemical Society,: Washington, D.C., 1998

• Stefan Stremersch^, Gerard J. Tellis, International Journal of Research in Marketing, Volume 21, Issue 4, December 2004, Pages 421–438

Patents:

• US Patent No 2495429 Original Microwave Oven Patent by Doctor Percy L. Spencer

Web‐based resources:

• http://www.smecc.org/microwave_oven.htm

• http://www.howstuffworks.com/microwave.htm

• http://www.gallawa.com/microtech/magnetron.html

• http://en.wikipedia.org/wiki/Cavity_magnetron

• http://www.wisegeek.com/what-is-a-magnetron.htm

• http://www.hardwaresecrets.com/article/252

• http://glos.umk.pl/2006/04/liczby/

• http://www.wiking.edu.pl/article.php?id=268