Pedometer for the elderly: Germany

Hendrik Becker (Germany)Susanna Yu Su Qian (Australia)

Enrique Parra Arce (Spain)Rajkaran Singh Kharbanda (India)

Victor Cruz Silva (Brazil)

The German Market

• Population: 82 million• Highest Gross Domestic product in Europe• GDP per capita around US$ 44,000 (in 2009)• Second largest export nation worldwide

The German Market

STRENGTHS:• Solid industrial base• Pivotal role of smaller companies• High degree of people working in R&D• Very low political risks • Strong exchange restrictions within the Euro-area• Very low corruption• High HDI (0.947)

The German Market

WEAKNESSES• Dependence on the global market• Poor demographics

- 20.3% (16 million) of the overall population are older than 65 years

- Birth-rate per women is with 1.37 one of the lowest worldwide

Strengths

PRODUCT• Software integration

differentiation • Performance:

additional features•Online services

The pedometer allows family and medical personnel to be regularly updated on the health of their patients.

DISTRIBUTION:• Cost Advantage

• Outsourcing• Avoids trade barriers and

tariffs

PROMOTION• Nursing homes AND general consumers. • Nursing homes: compete in the industry

• Consumers: it provides peace of mind• Consequential benefits: generate interest

Weaknesses

DISTRIBUTION

• FLEXIBILITY AND REACTION SPEED• Software Germany: respond to market changes

FAST and language familiarity

• Implementation speed: slow initially due to vast market but will improve over time

• Security and Safety Issues: POLL results in 2009 done by EU

Opportunities

• Expansion into new industries such as sports, fitness and schools to combat obese children

Threats• Substitutes and copy

cats: to combat them we will protect our IP through patents and copyrights.

Beat them on PRICE• 20 euro/5euro a month• Increased switching

costs• Transfer costs

SALES FORECAST According to a 2008 research by Faisal Bank of Switzerland the number of beds in the nursing homes was 757.186. However, they predicted the increase of this number to 1.135.000 in 2020 and 1.514.000 in 2050.

We have estimated that around half of the beds are occupied by elders with some health problems that restrict them from doing any physical activity.

This way we are facing a market of 175.000 consumers (assuming that among the 350.000 consumers there would be some not interested in the product).

YEAR 2011 2012 2013 2014 2015

SALES €IN THOUSANDS

700 3800 6700 8200 8300

CONSUMERS 5000 30000 65000 100000 125000

SOURCES OF FINANCE According to our sales predictions we will need an starting

capital of 250.000 € + 75.000 €.

SOURCES: Investors Forums: supporters of young enterpreneurship

who want to invest money in interesting ideas.

German Government: 7% of the nursing homes are owned by public German entities. As a consecuence financing us would be like and advance payment.

FOREIGN EXCHANGE RISK

Because we will be outsourcing the production we will be facing some exchange risk.

• India has a managed floating exchange rate with no predetermined path. • The EUR/INR rate have volatilities that are typical of floating exchange rates.

• However, large variations sometimes occur. In order to prevent possible losses we will consider some hedging operations.

Manufacturing Outsourced to India

• Global epicentre for technology and IT related manufacturing

• Becoming increasingly synonymous with quality

• High levels of expertise in linking/software and operating systems to hardware

• Experienced, cheap skilled labor – also possess advanced technical know-how

• Local established base in terms of contacts, manufacturers & suppliers

• Low transportation costs: relatively cheap shipping

• Benefits outweigh disadvantages: Cost-effective manufacturing

Cost Structure

Software linking operating system to the pedometer hardware to be developed in Germany.

R&D, installation, and maintenance costs for the 5-year period: €250,000 (in-line with industrial average)

One-off cost Includes software and technology development, and operating system encryption for the product

Cost of production per piece based on the forecasted sales figures: €11.

Added cost of €4 for every pedometer due to transportation, taxes, fees, duties, exchange rates, packaging etc

Total cost per pedometer to the point of sale: €15.

German vs. Indian Market

Cultural Differences Structure of Indian families differs significantly Extremely rare for people in India to send their parents/grandparents to

retirement homes and aged-care facilities Contrasting Economic Systems

Majority of the Indian population lives below the poverty line Very low Per Capita GDP relative to Germany. Vast proportion of the population wouldn’t be able to afford the product and

pay for complementary services.  Dependence on Technology

Low dependence on technology on average Increased demand for personal care (nurse or family member) to monitor

health progress. Unwillingness of the elderly population to adapt to technology.

We do not anticipate high level of sales in India

Problems anticipated after entry

● Threat to Privacy and Security

● Virus and Hackers

Conclusion

● Why it will be effective:

● Unsaturated and Neglected Market● Protected Intellectual Property● High Switching Costs● Integrated Promotion Strategy● Outsourced Production

Thank you!

Questions?