Assignment TakenTo prepare business plan for the F.Y. 2021-2022

Case UnderstandingThe business plan under consideration is a divisional expansion plan. The organisation is a courier company having branches all over India and currently delivering to all the pin codes. However it is proposed to open new division of business which will operate through drones to deliver couriers within short range of area known as "Hyper local delivery space". In this method of divisional expansion, new division will deliver couriers through drones within a reach of short range of area. It is required to get permission from Director general of civil aviation before operating any drone business in the country. The organisation has gained all the required permissions and tested all the drone flights which proved to be quite successful in its tests. The tests has been conducted beyond the visual line of sight (BVLOS). In this type of business, the organisations have options to choose short or long range drone based services. Though company currently have choosen to operate with short range drone based services, since the purchase cost of short range drones are generally lower than large range. Various pharma, food deliveries and other such industries have tested drone deliveries successfully, seeing which the business of courier delivery through drone seems practically feasible and cost effective as well. Now it will take only 15 minutes to fly 5 km through drone which was next to impossible with door to door courier delivery by man. We as the consultants to the business are required to propose and present a financial plan alongwith all the departmental solutions to make the drone delivery division feasible through all parameters and efficient as well for the growth of the organisation. Since drone delivery is a new business sector in countries like India, it is a challenge and opportunity as well to go with this business plan. It is an innovative approach to save time, cost and labour. It will make the couriers deliver faster than ever. The major issues with the business plan is the cost effectiveness itself. Achieving break even in the technology sector in the very first year is quite a task. Since the company wants to achieve the break even point in the very first year, it demands the variable expenditures to be as low as possible which is quite a challenging task here since we in this type of business variable expenditures are unavoidable due to requirement of technical and expert staff on regular basis. Huge advertisement expenses are to be done to promote the business and maintenance cost in such business are quite high. The business plan has 4 tier courier options. The company has available technology and manpower already. We need to innovate and come with great technological success to make the plan successful on the ground.

BCS Solution SummaryIt is proposed that the "Drone Courier Delivery" division should adopt a holistic approach to achieve the goals of the organisation. The business plan is a future technology which is coming on the ground soon with huge competition. RANKING BASED PROFITABILITY ANALYSIS : As per financial plan, ranking based approach of financial feasibility has been used. In this method ranks are alloted under various criterias which will summarily show the most profitable plan. We have given ranks on the basis of profitability per month, per unit, overall profitability and objective to achieve break even point. Marginal costing approach : Method of costing which is used here is marginal costing approach in which only variable expenses per month have been considered. Thus only monthly expenditures have been used for calculations. Break even analysis based on maximum capacity : For break even analysis is done considering the maximum business capacity. Thus each plan has been observed with great details as much as possible considering only one plan is executed at a point. In the end conclusion has been provided in the solution itself which shows that company's decision to use only short range drone will be feasible only when more and more items under Plan A are accepted thus to achieve break even in the very first year itself. For higher weights items company should start using long range drone as well then it be much more profitable for the company even in short run.

Solution

As per attached PDF file ( Rank based approach to achieve financial efficiency )

Conclusion More and more of items under plan A should be accepted with short range drone based services. For items with heavy weights, long range drone are suggested touse. It is suggested that company's decision to use only short range drone services is only useful if items under plan A and plan B are accepted. Thus company should also use the long range drone based services to achieve higher profitability and then only items under plan C and plan D can be accepted with goal of break even and profitability.