PROJECT WORK

MANAGEMENT ACCOUNTING

BUSINESS PLAN OF FORCE AUTOMOBILES

SUBMITTED TO:- Dr. Ritesh srivastava

SUBMITTED BY:Girish Balakrishnan FT-10-856 Anshul Kumar Jain FT-10-826 Abhay Pratap Singh FT-10-801 Chandan Kumar FT-10-842 Deepak Kumar FT-10-844

ACKNOWLEDGEMENT
The satisfaction and euphoria that accompany the successful completion of any task would be incomplete without mentioning the name of the people whose constant guidance and encouragement has crowned all our efforts with success. We would like to thank Dr. Ritesh Srivastava for his critical appraisal, comments and suggestions which helped us in maintaining the right direction for our project and making it meaningful. We are also obliged to all those people who directly or indirectly helped us in accomplishing this project. At last we would like to thank our batch mates, who have tried their level best to contribute and help us in performing this type of study in completion of the project. We would also like to specially thank our family and friends.

CONTENTS
MEANING OF COST ELEMENTS OF COST INTRODUCTION TO FORCE-AUTOMOBILES COMPANY AND PRODUCT - INTRODUCTION BUSINESS MODEL PRODUCTION AND MANUFACTURING PERFORMA OF COST SHEET COMPETITOR PRODUCT INDIGO MANZA COMPARATIVE ANALYSIS OF COST SHEETS MARKETING STRATEGIES FUTURE PLANS

MEANING OF COST
Cost can be defined as the price paid for something. But in the management terminology, cost refers to expenditure and not to price. Cost represents a sacrifice, a foregoing or a release of something of value. The INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS, LONDON, has defined cost as the amount of expenditure (actual or notional) incurred on or attributable to a given thing. For manufacturing of an automobile, the expenditure incurred on the purchase of raw-materials, wages paid to the workers , electricity and lighting expenses, depreciation on machinery used in the production, capital cost of owned factory building etc, are a few components of cost.

ELEMENTS OF COSTS
One of the main objects of cost accounting is to present the analysis of the total cost

of production in such a manner as to provide the maximum information useful to the business. The analysis and classification of costs is basically made with reference to factors on which expenditure is incurred. These factors are known as elements of cost. The various elements of cost are:1)Material cost 2)Labour cost 3)Expenses

MATERIAL COST
Material Cost refers to the cost of commodities supplied to an undertaking e.g., cost of steel which is supplied to automobile industries that use them to build their vehicles is categorized as material cost by the automobile company. Similarly, the tyres, window panes etc which are obtained from other companies also contribute towards this cost. Material cost may be further subdivided into
a)

DIRECT MATERIAL COST:- Direct material

cost means the cost of materials which can

be identified with and allocated to the cost centres or cost units. The main feature of direct material is that these enter into and form part of the finished product. e.g. cost of wood in case of furniture, cost of cotton in case of cotton yarn, cost of iron in case of machinery etc.
b)

INDIRECT MATERIAL COST:- It refers to

the material cost which cannot be allocated but can be apportioned to or absorbed by cost centres or cost units. These are the materials which cannot be traced as part of the product and their cost is distributed among the various cost centres or cost units on some equitable basis. Eg: Diesel used in generator, cotton waste, lubricating oil and grease used in machinery maintenance etc.

LABOUR COST
Labour cost refers to the cost of remuneration of the employees of the undertaking e.g., wages, salaries, commission etc. Labour cost may be subdivided into:-

DIRECT LABOUR COST (or DIRECT WAGES):- It refers to labor cost which can
a)

be identified with and allocated to cost centres or cost units. It includes the remuneration paid for converting the raw materials into finished products or for altering the construction composition of the product manufactured by an undertaking e.g., wages paid to factory workers involved in the production of company products like automobiles, bottles in case of bottling plant etc.

INDIRECT LABOUR COST (or INDIRECT WAGES):- It refers to the labor cost or
b)

wages which cannot be allocated but can be apportioned to or absorbed by cost centres or cost units eg: Salary paid to plant manager, salary paid to floor supervisor and shop engineer etc.

EXPENSES
Expenses refer to the cost of services provided to an undertaking and the notional cost of the owned assets (that is depreciation of owned factory building, office building, showroom building, plant and machinery etc). Expenses are subdivided into:-

Direct expenses (or Chargeable expenses):- These are the expenses (other
a)

than direct material cost and direct labour cost) which can be identified with and allocated to cost centres or cost units. eg., carriage and freight of direct materials purchased if such carriage and freight have not been added to the cost of materials, royalties paid on the basis of output, hire charges of special plant and machinery.
b)

Indirect Expenses:- Expenses which

cannot be allocated but can be apportioned to or absorbed by cost centres or cost units e.g., rent, taxes and insurance of factory building , factory lighting, repairs to factory building, depreciation of plant and machinery, repairs to machinery etc., are known as indirect expenses. The aggregate of direct cost material, direct labour cost and direct expenses is known as Direct Cost whereas the aggregate of indirect material cost, indirect labour cost and indirect expenses is known as Indirect Cost or Overhead.

Indirect cost or overhead may again be classified on the basis of functions as follows:

FACTORY OVERHEAD OR WORKS OVERHEAD:- Factory overhead includes all

the indirect costs incurred in the factory in connection with manufacturing operations. Factory overhead comprises the cost of indirect labour and all other indirect expenses which are incurred in the running of the factory or works, e.g., lubricating oil, cotton waste for cleaning the machinery, fuel costs involved in running generator, salaries of foreman and factory supervisors, factory rent , factory insurance , depreciation of owned factory building etc.

OFFICE AND ADMINISTRATION OVERHEAD:- These includes all indirect

costs relating to the direction, control and administration of an undertaking. In other words, office and administration overhead refers to general office expenses and expenses of administration and control of business e.g., office rent, office insurance, depreciation of owned office building, office lighting, depreciation of office furniture and stationary, audit fee, directors

remuneration, salary of general manager, bank charges etc.

SELLING AND DISTRIBUTION OVERHEAD:- These include all indirect

costs which are incurred for promoting sales and retaining the customers and for delivering the goods after their production. e.g., cost of advertisement, toll taxes and commission to dealers, salary of sales manager, salaries and commission of salesman, carriage on sales, packaging charges, running and maintenance of delivery vans.

CLASSIFICATION OF COSTS FOR THE COMPANY

The cost of the company is mainly classified into three parts:1)

FIXED COST:- It refers to those costs

which tend to remain unaffected by changes in the volume of output or sales. In other words, fixed cost remain unchanged with the increase and decrease in the output or sales. These cost remain fixed in total but their per unit cost changes with changes in output or sales. These cost

depend mainly on effusion of time and do not vary directly with the changes in the volume of output or sales. Rent, taxes, insurance charges, managers salary, etc., are typical examples of the fixed cost of the company. It should be remembered that fixed cost are not absolutely fixed for all time. These are fixed only in relation to a certain level of production capacity.

2)

VARIABLE COST:- It refers to those costs

which vary directly in proportion to changes in the volume of output or sales. These costs tend to increase or decrease with the rise or fall in the production or sales. Variable costs vary in total but their per unit remains constant. Direct material cost, direct wages, direct expenses etc., are typical examples of variable costs.
3)

SEMI VARIABLE COST:- It refers to those

costs which ten d to vary with changes in the volume of output or sales, but not directly in proportion to such changes. These costs have the characteristics of both fixed and variable costs. A apart of semivariable costs remains constant inspite of

changes in the volume of output or sales. Repairs and maintenance costs of plant, machinery and building, salary of supervisor, etc., are typical examples of semi-variable costs. Now the company will classify their cost into these different categories and prepare a cost 2sheet to decide the price at which we will launch their car in the market. After that we will also make a comparative analysis with our competitor i.e. INDICA V2.

COMPONENTS OF COST
A component of cost may be defined as the cumulative or aggregate of different elements of cost. By aggregating or grouping the various elements of cost, the following components or types of cost can be obtained:1)

PRIME COST:- Prime cost is the aggregate

of direct material cost, direct labourcost or direct expenses. Prime cost is also known as Flat Cost, First Cost or Direct Cost
2)

FACTORY COST:- Prime cost plus factory

overhead (or works overhead) is known as factory cost. Thus , factory cost is the aggregate of direct material cost, direct

labour cost, direct expenses and factory overhead. Also known as works cost, production cost, or manufacturing cost.
3)

OFFICE COST:- Factory cost plus office

and administrative overhead is known as Office cost. Also known as Gross cost or Cost of production.
4)

TOTAL COST:- Total cost is made up of

cost of production plus selling and distribution overhead. Thus, total cost includes all the elements of cost or all the items of expenditure till the commodity has been , finally sold. Also known as selling cost or cost of sales.

EXPLANATION
a)Direct material cost + direct wages +direct expenses = prime cost b)Prime cost + factory overhead = factory cost c)Factory cost +office and administration overhead = office cost d)Office cost +selling and distribution overhead = total cost e)Total cost +profit = selling price

PROJECT INTRODUCTION
NAME OF THE COMPANY : FORCE MOTORS BUSINESS AREA : MANUFACTURING ETHANOL FUELLED AUTOMOBILES PRODUCT NAME: GESTAPO LOCATION : DHANKAUR,UP

BUSINESS MODEL :
Force automobiles is a new automobile company which aims at supplying cheap,eco-friendly and stylishly-designed cars.We produce vehicles which run on the ethanol fuel (produced from sugarcane) rather than the conventional petrol and diesel.The biggest advantage of this is

that,the traditional vehicles can be made to run on ethanol with certain modification in the engine components and also slight changes in the exhaust mechanism. Now looking at ethanol fuel from the cost perspective, we have found from our research that ethanol from processed sugarcane costs roughly around 25 Rs,which is much cheaper than the petrol and diesel fuel costs.Moreover,since it is produced from sugarcane (which is a natural crop),it is more easier to procure in comparison with traditional fuel sources.The reason for choosing dhankaur in UP as the location for our manufacturing unit is the abundance of sugarcane in UP resulting in easier procurement and lower production costs. A few suppliers in India who specialize in producing Ethanol from sugarcane are:
1.Adi Biotech Private Limited, Delhi, New Delhi
Location: C-26, Qutub Institutional Area, New Delhi, Delhi, India, 110 016.

2.Som Group Of Industries, New Delhi

Location: A-1, Arjun Nagar, Safdarjung Enclave Extension, New Delhi, Delhi, India, 110 029.

The business plan we have decided for our company is that,since we are a new company with a budget constraint of upto 1 crore,we would be buying scrapped vehicles (or other old model vehicles having little or no market value from 2nd hand markets) and then re-engineer them to suit the requirements of ethanol fuelled vehicles.This would reduce the production costs considerably and help us sell our vehicles at a cheap rate.Since,we are purchasing scrapped vehicles,we are planning to modify the vehicle outer structure or roof and incorporate more stylish and attractive designs.We are initially planning to set a production target of 120 vehicles per year i.e 10 vehicles per month.We would be employing a total of nearly 70 workers out of whom 30 will be professional mechanics with prior experience and 40 would be new entrants. Moreover,we intend to purchase our own land (roughly, 3000 sq.m) and set up a

manufacturing unit having a capacity to simultaneously produce upto 5 vehicles. We are planning to buy machines like ; 1.CNC lathe machines 2.Milling machines 3.welding equipments 4.tyre inflation equipments 5.spray painting equipments 6.fork-lifts (to transport engine components and place them properly) etc. Now,the cost related to land and machinary have been listed in the subsequent pages.The manufacturing unit will also contain a machine area,a washing area,a generator room,painting area,tyre section etc. Coming to office location,we would rent an office in a prime locations like NOIDA/NEWDELHI,so that we can have better contacts with suppliers,dealers and advertising agencies.It would considerably increase the investment,but in the long run prove useful to market our cars in a better way.As far as the distribution strategies are concerned,we would tie up with dealers in

NCR region and slowly try to get dealers in other important metro cities of the country.In the initial stages of business,our main focus would be on developing good designs for our vehicles and sell them within a price tag of 3.2 lakhs and build a reputation for producing low emission,ecofriendly vehicles.We would partner with servicing stations in different regions of NCR and thereby provide better servicing facilities to our customers.So,during this stage,we are not focussing on profits but rather on surviving in the market by recovering the fixed costs (i.e land,building,machinery etc).

ETHANOL PRODUCTION

Production process:The basic steps for large scale production of ethanol are: microbial fermentation of sugars, ,Dehydration(requirements vary, see Ethanol fuel mixtures, below), and denaturing (optional). Prior to fermentation, some crops require saccharification or hydrolysis of carbohydrates such as cellulose and starch into sugars. Saccharification of cellulose is

called cellulolysis. Enzymes are used to convert starch into sugar. Fermentation:Ethanol is produced by microbial fermentation of the sugar. Microbial fermentation will currently only work directly with sugars. Two major components of plants, starch and cellulose, are both made up of sugars, and can in principle be converted to sugars for fermentation. Currently, only the sugar (e.g. sugar cane) and starch (e.g. corn) portions can be economically converted. However, there is much activity in the area of cellulosic ethanol, where the cellulose part of a plant is broken down to sugars and subsequently converted to ethanol. For the ethanol to be usable as a fuel, water must be removed. Most of the water is removed by distillation, but the purity is limited to 95-96% due to the formation of a low-boiling water-ethanol azeotrope. The 95.6% m/m (96.5% v/v) ethanol, 4.4% m/m (3.5% v/v) water mixture may be used as a fuel alone, but unlike anhydrous ethanol, is immiscible in gasoline, so the water fraction is typically removed in further

treatment in order to burn in combination with gasoline in gasoline engines. Distillation:For the ethanol to be usable as a fuel, water must be removed. Most of the water is removed by distillation, but the purity is limited to 95-96% due to the formation of a low-boiling water-ethanol azeotrope. The 95.6% m/m (96.5% v/v) ethanol, 4.4% m/m (3.5% v/v) water mixture may be used as a fuel alone, but unlike anhydrous ethanol, is immiscible in gasoline, so the water fraction is typically removed in further treatment in order to burn in combination with gasoline in gasoline engines. Dehydration:There are basically five dehydration processes to remove the water from an azeotropic ethanol/water mixture. The first process, used in many early fuel ethanol plants, is called azeotropic istillation and consists of adding benzene or cyclohexane to the mixture. When these components are added to the mixture, it forms a heterogeneous azeotropic mixture in vaporliquid-liquid equilibrium, which when distilled produces anhydrous ethanol in the

column bottom, and a vapor mixture of water and cyclohexane/benzene. When condensed, this becomes a two-phase liquid mixture. Another early method, called extractive distillation, consists of adding a ternary component which will increase ethanol's relative volatility. When the ternary mixture is distilled, it will produce anhydrous ethanol on the top stream of the column.

MODIFICATIONS TO BE DONE IN VEHICLE :

The various modifications to be done in the engine include: 1.Mainjet changes: involves altering the main metering jet in the carbuerator.This is called the main jet orifice and dictates as to how rich/lean the air-fuel mixture when the vehicle is travelling at cruising speeds.Since alcohol requires a richer air/fuel ratio, it's necessary to bore out the main jet orifice when using ethanol fuel. The standard jet size in MOTHER's alcoholpowered truck was .056" ... in other words, this was the diameter of the jet orifice. In order to operate the engine successfully on

alcohol fuel, it's necessary to enlarge this opening by anywhere from 20 to 40%. 2.Idle orifice changes : Most carburetors will require additional idle circuit enlargement in order for the engine to run at slowest, or idle, speeds. This is because the circuit that's fed by the main jet operates fully only when the throttle plate within the throat of the carburetor is opened past the idle position. When the plate is in the idle position, the air/fuel mixture is allowed to enter the manifold only through the idle orifice itself ... which, if it isn't large enough, will not provide the needed amount of air/fuel blend to keep the engine running. On some engines, it may only be necessary to loosen the idle mixture screw at the base of the carburetor in order to provide the correct amount of fuel, since this threaded shaft has a tapered tip which allows more mixture to pass as the tip is backed off. On other engines, it's possible that the seat itself, into which the tapered screw extends, must be enlarged in order to accomplish the same thing.

3.POWER VALVE CHANGES :- Most modern auto carburetors have what is known as a power valve that allows extra fuel to blend with the air/fuel mixture when the accelerator is depressed, in order to enrich the mixture under load conditions. This vacuum-controlled valve is spring loaded, and shuts off when it isn't needed in order to conserve fuel. The power valve used in the carburetor illustrated is somewhat difficult to alter and, besides, is sufficient for alcohol use in its normal configuration if it's working properly. However, there are other carburetors - specifically the Holley and Ford (Autolite or Motorcraft) brands - that have easily replaceable power valves which are available from auto parts stores in various sizes. If you use a power valve with a 25% or so greater flow capacity than the one that originally came with the carburetor, your air/alcohol mixture will be sufficiently enriched when your engine needs more power.

4.ACCELERATOR PUMP CHANGES :In addition to a power valve, almost all automotive carburetors utilize an accelerator pump. This is a mechanically activated plunger or diaphragm that injects a stream of raw fuel directly down the throat of the carburetor when the accelerator is suddenly depressed. The fuel is injected through a small orifice located in the throat wall at some point above the carburetor venturi (the point at which the throat narrows).

The reason the accelerator pump is incorporated into modern carburetors is that as the accelerator is pressed and more air/fuel mixture is drawn into the cylinders, some of the liquid particles in the blend tend to stick to the walls of the intake manifold, effectively leaning out the mixture by the time it reaches the combustion chambers. The extra squirt of fuel that's added by the accelerator pump makes up for this initial lean condition.

5.COMPRESSION RATIO CHANGES :Increasing the compression ratio of the engine will be impractical for most people, because of the expense and work involved ... however, this modification will do a great deal to improve engine performance and economy. Just like a timing advance, a compression ratio hike will take advantage of the potential that alcohol has to offer as a fuel. Optimally, the ratio can be increased to 14- or 15-to1 ... but even a nominal increase - to perhaps 12-to-1, a figure that some manufacturers have already offered in the past for premium gasoline use - will result in a vast improvement over the standard 8- or 8.5-to-1 that most manufacturers incorporate into their engines today. If you intend to convert an automobile that already has a compression ratio of 10-to-1 or better, it probably won't pay to make any internal changes. However, if the engine you're considering needs an overhaul, it would be wise to modify it regardless of its compression ratio.

The most inexpensive way to increase compression ratio is to install a set of high compression pistons. The forged units are designed to pack the air/fuel charge tightly into the combustion chamber for increased power, and have special relief notches built into their heads for valve clearance. Be cautioned, however, that some engines may not tolerate a 15-to-1 compression ratio with standard connecting rods and bearings ... these components, too, may have to be replaced with high-strength competition grade parts.

6.FUEL PREHEATING: In extremely cold

climates, it may be necessary to preheat your alcohol fuel before it enters the carburetor float bowl. This can be accomplished easily by splicing into the fuel feed line - near the point where it passes the upper radiator hose - and installing a fuel heater at this location.

These are some important changes that have to be made to make the vehicles suitable for ethanol. Other than these,once the engine has been completely over-hauled,we may proceed with the replacement of the vehicle hood with a newly designed one.Then,we may weld the new hood with the chassis frame and then follow it up with spray painting.The interior of the vehicle will be replaced with new leather seatings.Once the major changes have been done,new catalytic convertors would be fitted and tyres would be inflated and after fuel is filled in the tanks,we may have a test drive before sending it to the manufacturers.

PREPARATION OF COST SHEET

The following are the various cost incurred by the company for the production of one unit of GESTAPO:PARTICUL ARS Raw materials Indirect wages Rs./unit 24500 1800 PARTICUL ARS Direct wages Building cost Rs/unit 2833.33 4333.33

Factory lighting

3000

Factory heating

Genarator 10000 rent MONTHLY Directors 8000 fees Factory cleaning Factory equipmen ts and furnitures Loose tools written off Water supply 600 2220

NOT APPLICAB LE Haulage NOT APPLICAB LE Directors 80000 fee(office MONTHLY ) Sundry 10000 office MONTHLY expenses Office 10000 stationary MONTHLY 30000 MONTHLY

NOT Office APPLICAB rent LE 250 Bank charges

Legal expenses Cost of 7000 workshop rent of office building 3000

NOT APPLICAB LE Carriage 10000 outwards MONTHLY Depreciat NOT ion of APPLICAB machiner LE y Maintenanc 5000 e of MONTHLY
delivery van

Distributi on expenses Sales manager' s salaries Commissi on on sales

8000

3000

10000 /vehicle

Advertise ment expenditu re Maintena nce of delivery vans Factory insurance

25000 MONTHLY NOT APPLICAB LE 4333.33

COST SHEET PARTICULARS Land Machinery Building Direct material Direct labour Carriage inward PRIME COST Depreciation on building and machinery Indirect labour

(IN RUPEES) PER UNIT 150000 89,000 52000 49500 34000 2000 376500 14100

TOTAL 15,00,000 8,90,000 520000 495000 340000 20000 3765000 141000

18000

1800

Indirect material Indirect expenses Repair and maintenance Insurance Salaries Telephone expenses Computer Furniture Safety expenses Water expenses FACTORY COST OFFICE AND ADMINISTRAT ION EXPENSES Office rent Safety expenses Furniture Stationary Directors fee Sundry expenses Salary of employees

25450 45200 20000 52000 82250 5000 20000 2200 2085 1500 4179685

2545 4520 2000 433.33 8225 500 2000 220 208.50 150 411401.83

30000 2085 133500 10000 80000 120750 120750

3000 208.50 13350 1000 8000 12075 12075

Insurance Lighting and electricity Audit fees Water expenses Receptionist Cleaner OFFICE COST SELLING AND DISTRIBUTIO N EXPENSES Cost of advertisemen t Carriage outwards Commission on sales Sales manager salary Maintenance of delivery van TOTAL COST

13350 10000 2600 1000 5000 2000 4710720

1335 1000 260 100 500 200 464505.33

25000 10000 10000 30000 5000 4790720

2500 1000 1000 3000 500 472505.33

COMPETITOR VEHICLES (TATA MOTORS)

TATA MOTORS Ltd. Is a multinational corporation headquartered in Mumbai, India and it is part of the TATA GROUP. This group was formerly known as TELCO. TATA MOTORS is largest automobile company established in 1945. And manufactured its first commercial vehicle in 1954 in a collaboration with DAIMLER-BENZ. Some of its product are:INDICA VISTA INDIGO MANZA NANO FIAT CARS INDICA V2 XETA INDIGO CS INDICA V2 INDIGO MARINA INDIGO XL

COST SHEET OF THE COMPETITORS PRODUCT INDIGO MANZA:PARTICULARS Direct material Direct labour Direct expenses PRIME COST Factory overheads WORKS COST Administration overheads COST OF PRODUCTION Selling and distribution overheads COST OF SALES PROFIT SALES Rs. Per 15000 5000 100000 120000 200000 320000 50000 370000 54000 424000 78689 502689

Analysis of cost statement of both the companies FORCE MOTORS and TATA MOTORS.
Through the analysis of cost sheet of both the two companies following results have been derived from the comparison. a)Per unit cost of FORCE company is Rs. 48,505.33 more than TATA MOTORS.This is

because FORCE is a new company and has a fixed cost of Rs.2,91,000 which needs to be recovered first.So,until the break-even point is achieved,we need to price our vehicle at nearly Rs 3,50,000 to recover the fixed cost and also project the car as a cheap and eco-friendly alternative to other vehicles in the market. b)This means per sales,we can recover an extra of 59,000 Rs which will help us in keeping with service and maintenance. The selling price of Rs 3,50,000 will be partly covering fixed and partly variable cost. The total variable cost = 472505.33 291000 = 181505.33 from, 3,50,000 we will subtract this to get the recoverable fixed cost per sale = 3,50,000-181505.33= 168494.67 so,to recover the total fixed investment of 29,10,000, we will get a break even period of : 2,91,000/168494.67 = 1.72 yrs. This means if we maintain a steady sales of 120 units per year we will be able to break

even and recover our investment within 2 yrs. c)Advertisement cost of TATA MOTORS INDIGO MANZA is less than the per unit advertisement cost of FORCE MOTORS company because FORCE MOTORS is a new player in the market and will take some time to be established in the market .so FORCE MOTORS has to spend more on advertisement and promotional activities,to gain more visibility. d)Commission on the sales of FORCEAUTOMOBILES company is more than TATA MOTORS because it is a new player in the market and it has to pay more commission to attract more dealers from different parts of the country to sell the GESTAPO. Repair and maintenance charge of athe FORCE MOTORS company is very less than TATA MOTORS because the machines which are used by this FORCE MOTORS company are new so there is less need to maintain the machines.
e)

MARKETING STRATEGIES

STEPS TO SUCCESSFUL AUTOMOBILE BUSINESS FOR FORCE MOTORS

FORCE AUTOMOBILES needs to focus on the following strategies :

PROMOTION
As FORCE company is new in the market so it has to work on the advertisements and promotional activities.This can be done with the help of certain advertisement companies which would promote the GESTAPO brand using Newspapers,TV commercials,internet etc. The target audience of our company would be the middle income groups,families as well as youngsters within the age group of 30 yrs.Each of these categories would be analyzed seperately and GESTAPO brands with slight variations will be designed and manufactured. It would be promoted as an ecofriendly,cheap and efficient alternative to other vehicles in the market.

FUTURE PLAN OF FORCE COMPANY

Automobile market is that market where the well settled and prefer vehicles are there to exist in the market for long term is quite tuff. The 4ps of the marketing will be taken care of. Product quality would be maintained and further advances or new creations will be laid emphasis on. Once we break-even after 2 yrs,our priority will change from recovering fixed investments to earning profits by slowly increasing the price and come up with brand extensions.We also plan to increase our dealer base and open up showrooms in important cities to improve visibility.We would also setup new manufacturing units in different areas to increase our production capacity and thereby our total sales and earn higher profits.