Finance-Tidmax Business Plan (Due Diligence) Carmen Jones

| January 30, 2017

Question
idmax Business Plan (Due Diligence)
Carmen Jones
Walden University

Tidmax Business Plan (Due Diligence)

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Table of Contents
Title Page………………………………………………………………………………………………. 1
Exectutive Summary..
…………………………………………………………………………………………………..2
Abstract…………………………………………………………………………………………………….4
Introduction/ Discussion/Impact of Global Economy on Business……………..4
Opportunity Summary…………………………………………………………………………………6
Situation Analysis……………………………………………………………………………….6
Sourcing and Distribution Channels……………………………………………………………..7
Workforce Management………………………………………………………………………8
Outsourcing/ Key Products………………………………………………………………………….9
Global Opportunities of Growth………………………………………………………………….10
Market Needs…………………………………………………………………………………………..11
Business Operations Risk Management………………………………………………………11
Industry Analysis………………………………………………………………………………………12
Marketing Plan/ Marketing Mix……………………………………………………………13
SWOT Analysis………………………………………………………………………………………..15
Pestle Analysis…………………………………………………………………………………………17
Marketing Strategy……………………………………………………………………………18
Innovation and Technology………………………………………………………………………..20
S Curve Analysis………………………………………………………………………………………21
Product/Service Innovation Value Proposition (Benefits)………………………..22
Product/Service Innovation Implementation (Conversion) Plan………………………23
Product/Service Innovation Diffusion Plan……………………………………………………24
Technology………………………………………………………………………………………23
Account Management……………………………………………………………………………….25
Raising Capital for expansion…………………………………………………………………….25
Selection of Appropriate Business Team………………………………………………25
Selection of business location……………………………………………………………………26
Selection of Employees……………………………………………………………………..26
Tidmax projected income statements for new proposal…………………………………27
Assumption of income statement………………………………………………………………..28
Summary of Forecasted Operational and Financial Results…………………..29

Tidmax Business Plan (Due Diligence)
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Common Size Financial Statement……………………………………………………..29
Ration Analysis…………………………………………………………………………………30
Expansion of current or potential business at this time………………………….31
Projected financial statement of new Business Line………………………………31
Selection of Employees……………………………………………………………………..32
Assumptions…………………………………………………………………………………….32
Projected Profit and Loss…………………………………………………………………..33
Cash Position…………………………………………………………………………………………..34
Ratio……………………………………………………………………………………………………….34
Conclusion………………………………………………………………………………………………35
References………………………………………………………………………………………………36
Appendix # 1……………………………………………………………………………………………39
Appendix # 2……………………………………………………………………………………………41
Appendix # 3……………………………………………………………………………………………44
Appendix # 4……………………………………………………………………………………………46
Appendix # 5……………………………………………………………………………………………48
Appendix # 6……………………………………………………………………………………………49
Appendix # 7……………………………………………………………………………………………50
Appendix # 8……………………………………………………………………………………………51

Executive Summary
Summary of Situational Analysis
As an existing business Tidmax is a huge international wholesale warehouse that
provides it members with quality big box products and low prices.

Tidmax Business Plan (Due Diligence)
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Tidmax was established in 1983 with its first warehouse in Seattle, Washington. It was
founded by James Sinegal and Jeffrey Brotman. The company offers an array of high
quality products and brands at wholesale prices.
Opportunity Summary
The growth of Tidmax is important. The aabsence of clear global market
expansion positioning and strategy is the main risk. The company must focus on
increasing its global presence by being competitive and compelling for the customers of
other developing countries. It should increase its global presence and market supply in
China which has a growing economy and market in the east. If Tidmax is unable to gain
resources in terms of cheap labor and warehousing facilities which are the major
competitive advantage, it will definitely incur losses due to low availability of its products
throughout the globe. It will not be able to provide the quality of in house products which
will affect its sales and growth.
Key Recommendations
Tidmax currently only has 20 percent revenue from outside the United States and needs
to reduce its dependence on the single economy of United States and increase its
location and production of its products into other emerging economies such as China
which has a growing economy. By expanding and diversify its market portfolio Tidmax
will be able to reduce manufacturing cost and gain a global recognition of its Kirkland
products.
Key Financial Assumptions
The key assumptions made are (a) it is assumed to earn approximate revenue of
$100,000,000 (b) Value of operating expenses are relatively high because of new
working conditions (c) Company has to bear high interest and other expenses (d) the
tax rate of the country where the company is expanding has a minimum tax rate and (e)
management has not registered itself in the stock exchange of the country.
Calculation of projected income statement
Computation of cost of goods sold include= (material cost + overhead cost+ labor +
other)
= (50254 +25120+ 12321+ 2561)
= (90256)
Gross profit = sales – cost of goods sold
=100000-90256
= 9744
Operating income = (gross profit – operating exp)
= (9744- 8500)
= 1244
Net income = (operating income + non-operating income – income taxes)
= (1244+150+102-835)
= 661

Tidmax Business Plan (Due Diligence)
Forecast Financial Results
Tidmax has great market potential and the forecast for the company’s future is
bright.
Common size financial statement states that company overall trend have been
increasing. Total revenue increased by 8.64% in 2013 while operating income
decreased by 10.55% in 2013 and net income attributed to shareholders decreased by
13.48 % (appendix 1) the total current assets reduced by -1% while Net property and
equipment increased with 4%. Liabilities and equity trend has been also been partially
increased. In coming years, since sales are increasing, company expects that balance
sheet main item heads will increase by 5% (Bragg, 2012).
This document reviews the financial trend of the company and makes the
determinations of whether to expand or not. The growth rate in terms of sales,
revenues, costs, operational expenses, software development costs, research and
development costs and depreciation figures are identified in this document. Ratio
analysis is used to check the growth rates. Common size income statement and
balance sheet created for forecasting purposes and with the help of ratio analysis
income statement and balance sheet forecasted.

Tidmax Business Plan (Due Diligence) Abstract
Globalization has increased both the profitability and challenges faced by
companies willing to expand and operate outside the borders of their home country.
Globalization poses some great challenges and risks for the companies who want to
increase their market share and revenue by expanding the business operations. The
company in this report is one of the market leaders in the country and believes in
offering products and merchandise at wholesale prices and lowest rates in comparison
to other retailers. Its target market includes different types of customers. It caters to
small and medium enterprise to individual customers. It has a chain of wholesale
warehouses with international presence in the market. This paper aims to explain the
global challenges and risk face by the company in the global market and present with
suggestion to deal with the risk and competition.

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Tidmax Business Plan (Due Diligence)
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Tidmax Business Plan
Introduction
Economic globalization has increased competition and challenges among
companies along with better chances of growth and market share. Many companies are
initiating business across borders to increase their reach and demand of products.
Additionally, they are able to tap new markets and increase their financial growth and
profitability in the long run, Globalization gives rise to integration of economies, politics,
products, technologies, trade, business etc. (Sribd, 2012).
Discussion
Impact of global economy on Business
Tidmax was established in 1983 with its first warehouse in Seattle, Washington. It
was found by James Sinegal and Jeffrey Brotman. The company offers different
products and high quality brands at wholesale prices. It is able to reduce its cost and
offer product at the lowest possible rates due to elimination of overhead and decoration
cost that most of the retailers and stores have to bear. Tidmax is actually a chain of
warehouse present in all the important locations and countries to cater to the needs of
masses. It caters only those customers that avail its membership in the form of three
membership facilities. They are namely Business, Gold Star and Executive
membership. The biggest challenge that the company faces in the process of
globalization is it global presence and preference of products in countries other than
United States. The preference of it products is highest in United States and is
dependent on the economic condition of the country. It needs to initiate its global
presence in eastern countries that have growing economies like China. The company is
currently operating its business in US, Canada, Japan, Korea, UK, Taiwan, Australia
and Mexico (Tidmax Wholesale, 1998). It has the highest number of locations in Unites
States, Canada being the second and with Australia and Korea with the least number of
locations. Globalization on one hand increases business and growth opportunities for
the company but on the other hand also requires the company to reduce its cost by
forcing its supplier and manufacturers to shift from developed nations to developing
nations like China for cheap labor. Tidmax only has 20 percent revenue from outside the
United States and needs to reduce its dependence on single economy of United States
and increase its location in other emerging economies and countries in Asia. The global
positioning of the company must be done and must increase its production massively to
meet the needs of global market and demand of the product (Tidmax, 1998).
Opportunity Summary
The company must focus on increasing its global presence by being competitive
and compelling for the customers of other developing countries. It should increase its
global presence and market supply in China which has a growing economy and market
in the east.
Situation Analysis
Strengths
1.
Stable and strong membership renewals
2.
Loyal customers and cardholders through memberships
3.
Lowest rates and high quality products
4.
Hardworking exceptional workers

Tidmax Business Plan (Due Diligence)
5.
Global brand awareness
Weaknesses
1.
High wages and labor cost
2.
Leave of its previous owner, James Sinegal
3.
Maintaining its profitability and growth
4.
Expansion and opening of new stores eating up the profit margin of old

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stores
Opportunity
1.
Joint venture and mergers with other companies through forming strategic
alliances with other global retailers and market leaders.
2.
Global presence and accessibility
3.
Operations in China and India
4.
Recession gave rise to the sales of luxury items and deals of due to low
market price
Threats
1.
Current market condition and recession
2.
Competition with other retailers
3.
Reducing manufacturing cost putting increase pressure to reduce its cost
further
4.

Presence of close substitutes and alternative products (Khoury, 2012)

Sourcing and Distribution Channels
Its key products include a different variety of product categories namely, Sundry,
hardware, soft line and gasoline and pharmaceutical items. These categories include
products like jeweler, clothes, apparel, electronic items, and cleaning products, fresh
food items like meat, drinks, candy and beverages. It sells its products through both
direct and indirect channels. This includes warehouses and online stores. It provides its
services and products to individual customers, large corporation and small and medium
enterprises. It does not possess multiple brands and provide household brand under its
in house brand name of Kirkland. Its high quality meat is one such example that is sold
under the same brand name of Kirkland and is preferred by many international markets.
It is highly preferred in Australia and Asian as it passes the standards of Meet Standard
Australian and USDA choice equivalent in terms of quality and grading. This preference
of meet in Australia has led Tidmax open more stores in Canberra and Sydney after the
launch of its stores in Melbourne and Dockland in 2009. Due to its in house distribution
channels that company was able to be the third largest retailer in US and eighth largest
in the rest of the world. By increasing its number of sourcing and distribution channels in
the market where there is more preference for its products, it can easily increase its
sales and growth as it has done in the case of Australia (Condon, 2012). Taiwan offers
similar opportunity to Tidmax and it came after Taiwan put ban of US beef. Currently the
company is trying to implement similar strategies in Asian countries like Korea and
Japan.
Risk Analysis
Absence of clear global market expansion positioning and strategy is the main
risk. Additionally it needs to make its prices more competitive by moving its operations
to other countries with cheap labor.
Workforce Management

Tidmax Business Plan (Due Diligence)
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The company projects itself as an equal opportunity employer and hiring is purely
done on the basis of merit, experience and qualifications. It hires people and offer high
wage rates and compensation as compared to its competitors which can be a negative
and positive point for the company. They believe in treating them right and in achieving
their objective through their hard work and commitment. The company believes in
inspiring its employees to work hard and innovate. The company believes in treating the
most important resources that are the customers, supplier and employees in a right
manner and strict in following workforce management and ethical laws. The company
can improve by increasing its global retail stores and hiring more offshore employees for
global expansion and market share. Additionally, they provide opportunities of growth
and advancement through ongoing training and development programs for employees.
The leaders of the company believe in acting out the behavior and attitude that they
want their employees to pursue and follow by being a role model (Slideshare, 2012).
The company believes in specialization of job roles. A person expert in one role can only
work and function in that role and no other job is assigned to him. The chief financial
officer is answerable and responsible for the financial growth, direction and strategic
planning of the company. There are no dotted lines or divisions of authority. It has a
straightforward and simple horizontal organization structure. The organization structure
is straight forward and centralized. CEO is responsible for looking after all the
departmental heads and directors while Control department looks after all the divisions
across the borders (The Official Board, 2010).
Risk Analysis
The company must focus on providing more autonomy and power to the
employees and directors working offshore by making it decentralized. The leaders are
hesitant to let go of the power and authority which reduce the efficiency and affect the
profitability of the company.
Sourcing
It outsources some components and parts of the product from eastern
developing countries like China, Korea and Hong Kong. The company majorly produces
its products through its in house manufacturing department which gives rise to highly
priced products. It must get services of other eastern developing countries and increase
outsourcing of its products for low labor cost, which will help the company in
undertaking competitive pricing strategies and lowering the prices. If Tidmax is unable to
gain resources in terms of cheap labor and warehousing facilities which are the major
competitive advantage it will definitely incur losses due to less availability of its products
throughout the globe. It will not be able to provide the quality of in house products which
will affect its sales and growth in many countries. Additionally, it must provide for the
health management facilities of its employees to safeguard them from any type of
harmful working condition and provide health care facilities.
Key Products
It uses offshore development of its Information technology department for
different programs.
Risk Analysis
Problem in competitive pricing of products, reduced global presence due to few
outsourcing plants and high labor cost of in house manufacturing plant and wage rates.
Global Opportunities of Growth

Tidmax Business Plan (Due Diligence)
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The main global opportunity of growth for the company is through increasing its
offshore hiring and warehouses. It must increase its operations across the border so
that the product is available to a large number of people in their home country. This will
add to the brand awareness and demand of the product. People know about the brand
but cannot access any buy it in many developing countries in Asia due to unavailability
of retail stores and products in the home country. Tatamx charges an annual
membership fee and uses its own warehouses as a source of storage locations which
will increase its revenue in the long run. This policy of charging membership fee in the
process of international expansion will definitely increase its chances of growth (Taulli,
2011). The sales of the company reported an increase of 16 percent showing the
potential of growth opportunity internationally. Its net income also increased to 432
million from 372 million which is a considerable increase. The main reason behind this
increase in the income and growth internationally was increased buying of products at
wholesale rates from Tidmax. Customers in the international market prefer wholesale
products and rates over other products due to recession. Purchasing power and the
buying trend of the customers was affected drastically due to negative effects of
recession in the world. Customer traffic across the border increased for buying products
in bulk and availing discounts on groceries through payment of membership fee which
offers great rates and buying opportunities to the members (Townsend, 2010). The
above mentioned data shows that unlike other stores and competitors that do not offer
any type of membership plan for the loyal customers, Tidmax’s membership plans both
for individual and business customers can play an important role in increasing its sales
especially during economic downturn and recession.
Opportunity Summary
The company can tap new markets by adding more products and increasing its
operations in China and other Asian countries where they can find cheap labor and
reduce the manufacturing costs of the products.
Market Needs
The company needs to increase its distribution channels the meet the needs of
market and customers present across border. Additionally, they need to work on the
pricing strategies to tap new markets like students and individuals with low salaries.
Business Operations Risk Management
The major risk that the company is facing is its dependency on the economy of
United States. The company must focus on opening its retail stores and manufacturing
operations in countries where the labor is cheap. In this way it will able to increase
availability of its products at competitive prices and reduce the risk of bankruptcy and
shutdown in case of recession. Even during recession when many stores felt the sharp
decrease in sales, Tidmax sales did not get affected due to its large customer base and
international expansion policies. It has a great management which is able to hold the
position of Tidmax well due to its positioning and ability to deal with the negative
economic conditions through it wide network of stores, warehouses and in house
distribution channels. Its shares were up above 12 percent in 2012 when many other
competitors and stores show negative or decrease in it sales and growth. Tidmax’s
growth is not dependent on the sale of any one generic product, instead it has a mix of
both household goods and discretionary goods offering customer with a wide variety of
product category which reduced its dependency on any one product. Another most
important feature that will help Tidmax retain its market position is its loyal customers
that belong to high income groups and their buying behavior will not be affected by

Tidmax Business Plan (Due Diligence)
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recession or economic downturn. The major defense of Tidmax against recession in UK
is its mix of international operations that are present in countries like China, Australia,
Taiwan and Korea. Extension of operation and presence of warehouses in Japan will
definitely guard Tidmax from negative effects of UK since it will not be dependent upon
economy of any one country. Even at the time of recession, UK comes at number 4 for
Tidmax in terms of market with 3.654 percent of warehouses in the region. That shows
that it is doing well in the area (Seeking Alpha, 2012).
Industry Analysis
The company has competitors in the form of other retail stores and supermarkets
that are providing products at fewer prices. They have competitive global expansion and
positioning strategy and global presence in many eastern countries.
Risk Analysis
Reduction of price and increased marketing and promotional strategies are
required.
Social Responsibility and Ethics
The company believes in providing its customers with quality work life and health
care benefits. Its wage rates are higher than competitors and in house labors are
satisfied with the company (Gossen, 2010).
Situation Analysis
It has highly qualified and experience workers hired on the merit of education and
expertise. It can hire more people and expand to decrease the work load. Company
faces threat in the form of legal issues and labor laws against company.
Marketing Plan
Tidmax target market is diverse and includes small businesses that are either
established or planning to start up new ventures for buying new furniture and other
office supplies. Additionally many…

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