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Sample Operational Plan In the Pipeline

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									In the Pipeline
Operational Plan
Business Structure ITP is an incorporated Delaware company. Its shareholders consist of the three members of the management team (25% each) and the inventor's Australian company (25%). Currently all four shareholders are directors. ITP will appoint an independent chairman with relevant industry experience. The convertible note to be issued to the venture capitalist may convert into 25% equity in ITP between January 1 and June 30, 2000. A seat on the board will be offered upon conversion. Figure 3 illustrates the equity and managerial structure of ITP, and the joint venture structure. Figure 3: ITP Equity & Managerial Structure - Year 1 The inventor will have an ongoing contractual role in the development of Snapfix for ITP. The incorporated Joint Venture will be the owner of the California operations as it will have inventory and be responsible for marketing and manufacturing costs, payables, receivables and debtors. ITP will own 70% of the shares in the incorporated joint venture and the manufacturer will own 30%. Future Products ITP has a further three ranges of products, Volsnaps and Ezifix Anchors to launch on the US construction market. Also to be launched is an irrigation variation of Snapfix. ITP's business risk will be diversified by having these products on the market simultaneously. Snapfix Irrigation - January 1999 Launch: A variation of Snapfix that repairs damaged low-pressure irrigation pipe. Initial market research indicates that the major demand for this product will come from the repair of agricultural and golf course irrigation pipe. Volsnaps - January 2000 Launch: A range of PVC moulds which aid in the accurate placement of pipe through concrete slabs during their formation, eliminating the need for costly and time consuming drilling after formation. Ezifix Anchors - January 2001 Launch: A revolutionary method of anchoring and hanging suspended ceilings and conduit from concrete slabs. They eliminate the need for costly drilling to fix hanging devices into overhead concrete. Development Activities ITP will not conduct scientific research but rather locate and commercialize at least two additional product lines from outside of the company by the end of 2001. It will be the task of ITP's New Venture Manager, Nicholas Love, to identify and advise

management of these new product opportunities for ITP. Nicholas will conduct negotiations with the inventors of these new products to secure the purchase or assignment of the intellectual property lights. Expenditure has been provided for in the financials to assist in the purchase of intellectual property rights to new products identified by the New Venture Manager. In addition, the inventors of the products secured by ITP will continue to refine and further develop their inventions on a consulting basis. Expansion Plans In keeping with its strategic objectives, ITP aims to enter into follow up joint ventures with companies whose strengths he in the manufacturing and distribution of plastics products. ITP will have finalized joint venture arrangements in the South by 2000, and the Midwest by 2002, utilizing a similar structure to the joint venture in California. Figure 4 illustrates the sequential expansion schedule for ITP. Appendix C sets out ITP's action plan for the years 1998 to 2003, highlighting the company's regional expansion strategy. Managerial Personnel ITP's managerial structure facilitates the achievement of the company's aims and objectives by efficiently dividing and delegating responsibilities in order to utilize each manager's distinctive skills and experience. See Appendix B for management resumes. Maarten Byl is Chief Executive and Marketing Manager. He will devise strategy and manage and coordinate the company's marketing activities. Maarten is responsible for identifying - and conducting negotiations with potential joint venture partners and will also work to ensure that ITP follows its strategic direction and achieves its aims and objectives. Maarten will return to the United States in July 1997. Maarten brings to ITP extensive experience in conducting market research and devising marketing plans for small and medium size businesses. He has also aided in the production of proposals and the screening of potential applicants for major U.S. government contracts. This experience in business development will be critical to ITP's success. Nick Raschella is Finance and Administration manager. He will be responsible for day to day administration of the joint venture and ITP. Nick will relocate to the United States in January 1998. Nick brings to ITP extensive experience in finance, accounting and taxation matters. He has worked for two international chartered accounting firms and has worked in Canada. His client base included many diverse manufacturing and services companies. Nick has also acted as financial consultant, assisting, clients with bank finance applications. Prior to obtaining his MBA, he worked as part of a small Australian management team in a French owned CAD/CAM technology company. His tasks included the general administration of the company - a similar role to that held within ITP.

Nicholas Love is ITP's Legal Liaison and New Venture Manager. His task is to assess and respond to any legal issues arising from the joint venture and relationships with inventors. He will consult with external legal advisers when necessary and work to identify potential new products. Nicholas will relocate to the United States in October 1998. Nicholas brings to ITP practical legal and managerial consulting experience. He has worked for a national law firm (having been admitted to practice as a Solicitor of the Supreme Court of Queensland), providing general commercial advice to Australian and international clients, specializing in industrial and intellectual property law and joint venture arrangements. Whilst studying he acted as a consultant for a national property company. He advised the managing director as to the viability of a proposal to purchase the operations of a number of property firms along the eastern seaboard of Australia. Additional Managerial Personnel Appointments As ITP grows, additional managerial personnel will be appointed, primarily in the area of marketing as illustrated in Table 5 below. The costs associated with employing these managerial staff are reflected in the financial statements. Table 5: Marketing Personnel Appointments
Year Positions 2000 Volsnaps Manager 2000 Two Regional Snapfix Managers 2001 Ezifix Anchors Manager 2002 Two Snapfix Regional Managers Region California South California Midwest

1999 Snapfix Managers & Two Assistant Managers California

Non-Managerial Personnel ITP is to employ three office support and administration staff in its California office, over the first two years. It is expected that numbers of these non-managerial personnel will increase as the company grows. The costs associated with employing these support staff are reflected in the financial statements. Risk Mitigation Strategies ITP recognizes the risks associated with this new venture, and has devised specific strategies to alleviate them. The risks and associated mitigation strategies are: 1. Intellectual Property Infringement:  Increase rate of diffusion via compressing of the timetable to sign up joint ventures in each of the geographic regions in the United States  Secure legal services on a contingency basis and purchase patent insurance policy  Increase the web of intellectual property protection around ITP's products, funded by continuous significant expenditure

2. Aggressive Competitors:  Respond to a competitive challenge in a new region by shipping Snapfix to that market subsequent to establishing a similar joint venture in that region with a manufacturer/distributor  Maintain Snapfix's advantage over the competition by:     on-going product improvement and redesign building brand equity through the establishment of trademarks consistently providing superior customer service seeking and entering into regional joint ventures throughout the United States

3. Joint Venture Dissolution:    Find substitute partner from the large pool with excess manufacturing capacity Independent mediator will serve as arbitrator in case of dispute No exit clauses will be included in the contract

4. Management Team Dissolution    The proven working relationship between members of the management team Equity contribution helps align interests in ITP Management teams skills are not indispensable

5. Lack of Viable Follow-up Products  Financial statements do not account for follow up products and still show ITP to be a viable business, with a high return to risk


								
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