Should Advanced Valley enter the new market of solar installations in Saudi Arabia to increase its profitability

I also give my gratitude towards my teacher, Mr. Mohammed Salem, who was always supporting me in my internal assessment. Research Question Should Advanced Valley enter the new market of solar panels in Saudi Arabia to increase its profitability? Proposed Methodology • Rationale for study: I chose to investigate Advanced Valley on the subject of solar energy, solely because Saudi Arabia is evolving into the new market of renewable energy. Advanced Valley would like to enter this new market as it is an opportunity for them to grow. Therefore, I will be analyzing and evaluating the multiple opportunities and threats presented to Advanced Valley. 7 Cash flow • Unit 4: Marketing • 4. 3 Sales forecasting • 4. 4 Market research • Possible sources of information: Primary: • Interview with Mr. Tariq Alshaghrood, CEO of Advanced Valley • Company information from Advanced Valley Employees • Statistical analyzation of solar market Secondary: • Reports and statistics from governmental institutions • Advanced Valley website • Advanced Valley blogs • Organizations and individuals to be approached: Position Priority/Useful What information I hope to get CEO of Advanced Valley High Interactions, plan, mission, vision, foreign company negotiations Employees of Advanced Valley High Financial statements, statistics Possible Foreign companies negotiating with Advanced Valley High Financial queries, costs, possible solutions, negotiations Local Solar Panel companies Low/Medium Local prices Ministry of Energy, Industry and Natural Resources.

General authority for statistics. • Not all statistical information regarding solar energy is provided • Perform personal research and create tables and charts • Staff are mostly Arabs, thus questions and answers will all be Arabic • Surveys and questions will have to be translated in order to apply it on the staff • The order for activities and a timescale for the project: Task Name Start Date End Date Duration Acknowledge Investigation 20/05/2017 10/06/2017 21 Research possible Ideas 12/06/2017 25/06/2017 13 Choose an organization 26/06/2017 10/07/2017 14 Research organization for key issues 12/07/2017 15/08/2017 34 Propose idea to supervisor 16/08/2017 19/08/2017 3 Finalize topic 20/08/2017 05/09/2017 16 Create a rationale 05/09/2017 20/09/2017 15 Complete research proposal 21/09/2017 13/10/2017 22 Meeting with supervisor 15/10/2017 17/10/2017 2 Finalise research proposal 20/10/2017 27/10/2017 7 Create questions for interview 30/10/2017 03/11/2017 4 Conduct meeting with CEO 05/11/2017 07/11/2017 2 Analyse data 10/11/2017 25/11/2017 15 Complete first IA draft 28/11/2017 18/12/2017 20 Present investigation to the organisation 22/12/2017 24/12/2017 2 Record feedback and complete adjustments 25/12/2017 28/12/2017 3 Meeting with the supervisor 29/12/2017 31/12/2017 2 Make the possible final adjustments 01/01/2018 04/01/2018 3 Viva Voce 05/01/2018 06/01/2018 1 Due Date 20/05/2017 14/01/2018 239 Gantt chart (Using Microsoft Excel 2010, spreadsheet format created by teamgantt) Word Count: 495 Abstract: Advanced Valley is a consultancy and representation company that specializes in ground support equipment.

Founded in 2015, Advanced Valley is looking to venture into a new market to increase its profitability. One of its plans is to commence in the sought after solar energy market. Therefore, I will be analyzing and investigating the potential opportunities and risks the solar energy market possesses. This will enable Mr. Therefore, Mr. Alshaghrood (CEO of Advanced Valley) is looking forward to entering a new market in which he could provide competitive prices in order to penetrate the market and build a high status for his company. One of the new evolving markets in Saudi Arabia is solar energy. Thus, for this reason, Advanced Valley is interested in evaluating the possible opportunities and risks this markets possesses. This has therefore led me to research the following question: “Should Advanced Valley enter the new market of solar installations in Saudi Arabia to increase its profitability?” According to the Business and Management syllabus1, I will be covering 1.

3 sales forecasting, 4. 4 market research. These topics will determine Advanced Valley’s potential market share, opportunities and risks in entering the new market of solar energy, and current financial situation. Methodology employed: (200 words) Three methods of data collection were used in this research. They are both primary methods of data collection and secondary methods of data collection. If the research was to be conducted another time, then the financial records will extend for more than two years. Business tools and theories used to assess research question: 1. Return on capital employed (ROCE) 2. Net Profit Margin 3. Gross Profit Margin 4. Firstly, we must analyse the profit and loss account of the past 3 years at advanced valley since its establishment. According to the profit and loss account provided by the financial department2, we notice that since its foundation, factors such as dividends and loans were not included simply because they were irrelevant.

As stated in the beginning, Mr. Alshaghrood does not consider splitting equity. Advanced Valley runs as a privately held company that denies any external factors such as shareholders or loans. Channel of distribution costs: Factory production (including packaging) 337. 5 riyals/ per solar panel (1,406,362. 5 SAR) Transport (Ship) 213. 75 riyals / per solar panel (890,696. 25 SAR) Total Truck Transport 93. Output Sales (1099 SAR) Total Revenue (SAR) Fixed Costs (including expenses) Variable Costs Total Costs Profit 0 0% (0) 0 577,500 0 577,500 -577,500 1 20% (834) 916,566 577,500 537,930 1,115,430 -198,864 2 40% (1667) 1,832,033 577,500 1,075,215 1,652,715 179,318 3 60%(2,500) 2,747,500 577,500 1,612,500 2,190,000 557,500 4 80% (3,334) 3,664,066 577,500 2,150,430 2,727,930 936,136 5 96% (4000) 4,396,000 577,500 2,580,000 3,157,500 1,238,500 6 100% (4,167) 4,579,533 577,500 2,687,715 3,265,215 1,314,318 Firstly I began with a Break Even Analysis: Weeks Details Cost & Revenue Net profit 1 Production payment (materials, wages, rent, etc. ) - SAR 1,406,362. 50 - SAR 1,406,362. 50 2 Expenses paid - SAR 390,000 - SAR 1,796,362. 5 3 Shipping ship paid - SAR 890,696. The efficiency is in regards to how good the Company is utilizing its capital. Return On Capital Employed was used to evaluate this.

It was calculated using the formula below This was our first tool for analysis NB: was obtained by Total assets less current liabilities Return on capital employed (ROCE): = 30. 51% From the analysis of ROCE, the efficiency of using the capital for the Company is increasing. This implies good management hence it can take up big projects like installation of solar panels which is a capital intensive field. This is an indicator of the level of the efficiency that policies of the business are. This is because any successfully policy will result in high profit margin. Gross profit margin This is used to reveal the amount of money left over after subtracting cost of goods sold from the turnover or the sales. This method was applied for calculating the gross profit margin for Advance Valley.

This is among the many layers used by the analysts to assess profitability of this Company. However, Advanced Valley operates only under internal finance, solely to eliminate equity and maximize retained profit. These methods include personal funds, family support, working capital, retained profit, selling assets, and investing extra cash. Advanced Valley can therefore try out the new market of solar installation. It is likely to succeed in this new field because its internal performance is good. Acid test ratio Apart from the Company being able to for long-term and short-term liabilities, the Company must also be able to use its quick assets or cash that is available to immediately pay for its current liabilities. It has enough resources to take up a big investment.

The workers are also experienced in dealing with solar installation. We expect this to extend in electric in its new market. Opportunity The government has raised a concern for the need to increase power supply in Saudi Arabia. It has plans to reduce use of petroleum to produce electricity hence need for solar energy. The analysis was based only on three years. It would be better if the duration for the analysis was more than three years so that the overall trend could be established easily however that is literally impossible simply because the company was founded in 2015. The analysis has shown that the Company is able to manage its internal operations effectively. This is revealed through the tests that were conducted in the previous section after data collection.

There is a growing demand of electricity in Saudi Arabia. Advance Test should revisit its pricing of its commodities or customer relations so as to increase sales. If these are considered, then it is likely to realize high profits as it enters into new market of solar installation in Saudi Arabia. END HERE ………………………………………………………………………………… Works Cited Chava, Sudheer, and Michael R. Roberts. "How does financing impact investment? The Role of Debt Covenants.  1, 2017, pp. Elsevier. "New markets for solar thermal power gain some momentum. " Renewable Energy Focus, vol.  14, no. " The Atlantic, 30 Mar.  2018, www. theatlantic. com/magazine/archive/2015/07/saudis-solar-energy/395315/. White Paper. 5 3,626,000 Retained profit 2,436,958. 5 3,626,000 Appendix 3: table of output, sales, fixed, variable and Total Profit Output Sales (1099 SAR) Total Revenue (SAR) Fixed Costs (including expenses) Variable Costs Total Costs Profit 0 0% (0) 0 577,500 0 577,500 -577,500 1 20% (834) 916,566 577,500 537,930 1,115,430 -198,864 2 40% (1667) 1,832,033 577,500 1,075,215 1,652,715 179,318 3 60%(2,500) 2,747,500 577,500 1,612,500 2,190,000 557,500 4 80% (3,334) 3,664,066 577,500 2,150,430 2,727,930 936,136 5 96% (4000) 4,396,000 577,500 2,580,000 3,157,500 1,238,500 6 100% (4,167) 4,579,533 577,500 2,687,715 3,265,215 1,314,318 Appendix 4: a table of revenue, cost, expenses and profits 4167 solar panels (SAR) 999 SAR 1049 SAR 1099 SAR 1125 SAR (average price) Revenue 4,162,833 4,371,183 4,579,533 4,687,875 Total Costs (including warehouse rent) 2,875,215 2,875,215 2,875,215 2,875,215 Gross Profit 1,287,618 1,495,968 1,704,318 1,812,660 Expenses 390,000 390,000 390,000 390,000 Net profit before tax 897,618 1,105,968 1,314,318 1,422,660 Tax 7.

5 Net profit after tax 830,296 1,023,020. 5 Appendix 5: Factory production Factory production (including packaging) 337. 5 riyals/ per solar panel (1,406,362. We operate under the Ministry of Energy and mostly negotiate with governmental institutions. I: Do you face any struggles in terms of customers? T: Yes. Due to our recent establishment, most institutions avoid us. However Advanced Valley was recently awarded a contract with the Royal Saudi Land Forces Air Command to provide ground support equipment and IT for its bases scattered around Saud Arabia (Advanced Valley, July 15). In fact we are in talks for an order of 4000 units of solar panels. We are not so much risk investors. We understand that the greater the risk the higher the return. This is why we are even daring a more advanced level of operation that has got many competitors.

Our solid financial base is also our strength in propelling us to undertake major investment decisions. Customers have confidence in our services and they have always had loyalty because of customer satisfaction. This means that our clients are those who are uses solar. This has been not easy here in Saudi Arabia as oil is the main source of power. In fact the Saudi Arabians consume most of the drilled oil in the country. They have little regard for other renewable energy or the green energy. This has led to decline on the demand of our products. However we are observing significant rise in demand of our products. This is after the government advocating for increase in power energy by use of alternative production means away from petroleum.