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The Road to Document Imaging in South Africa. Chelsea Tucker Marie LaRiviere Jayana Cali JJ Mulwanda Benjamin Skidmore. South Africa FDI Assessment: Go. - PowerPoint PPT Presentation
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The Road to Document Imagingin South Africa
Chelsea Tucker Marie LaRiviere Jayana Cali JJ Mulwanda Benjamin Skidmore
What: Pursue a market seeking subsidiary in South Africa (RSA), providing document imaging services to government and healthcare entities
Political: RSA is a democracy that is friendly to foreign investors and looking to develop economically
Independent Central Bank: Independent yet influenced by ruling party. Still, sufficient degree of policy stability
Economic: Growing economy; improving infrastructure; expanding from summer 2010 World Cup preparations
Currency: The Rand is free floating. This implies currency risk, but historic valuation trends make currency risk important but not preventative for entry
South Africa FDI Assessment: Go
Potential Entrants Low saturation rate will attract entrants Kodak has first mover advantage versus US entrants Various local players already in the market
Buyer Bargaining Power Kodak has a history of strong relationships with clients Political risks with foreign investment Economic risk with recession and potentially low demand
Supplier Bargaining Power Kodak has a strong brand and global distribution network Kodak is susceptible to supplier risk due to high level of outsourcing
Threat of Substitutes Traditional document storage: filing Option to use a Kodak Independent Software Vendor or Reseller
Porter’s Five Forces Analysis
Strong South African Market Potential
Overall market related risk: LOW
Current saturation level: LOW
Growth potential: HIGH
The Digital Imaging MarketSector Potential Customers Document Imaging Possibilities
Local Government Offi ces
Birth certificates, death certificates, professional/business l icensing records, property records, census records, genealogy records, fragile and odd-shaped historical records
Passport Offi ces Passport & Visa documents, immigration records
Judicial & Court Offi cesCase files, docket sheets, marriage and divorce records, wills & inheritance documents, arrest warrants
Police DepartmentsCriminal records, public arrest records, background checks, case investigations
Motor Vehicle Offi ces National and Regional driver cards
Treasury & Tax DepartmentsTax return files, property tax records, income tax records, audit records
Law Offi cesHistorical case files, legal filings, affi davits, subpoenas, petitions, motions, copies of correspondence, client records
Hospitals & Doctor's Offi cesHistorical patient medical records, prescriptions, medical examinations, MRI's, CAT scans, X-rays
Banks & Lending InstitutionsMortgage statements, l ien documents, historical account statements, credit card statements
Schools & UniversitiesRegistrar transcripts, student files, course catalogues, admissions applications
Small Businessescustomer account records, receipts, tax returns, loan agreements, accounting records, insurance policies & claims
Public
Private
5
P&L Category Cumulative 8 Year Forecast
Key Assumptions
Revenue $113.5 Million $0.5 Billion in total market size Kodak share of market beginning at 0.5% in year 1 and growing to 4% in year 8
Gross Margin $32.7 Million(28.9% Margin)
Existing Kodak Document Imaging Business Unit Gross Margins
Selling, General & Administrative Expenses
$20 Million Starting with existing Kodak Business Unit expense composition as a % of revenue with annual improvements Initially offset by additional expenses related to set up
Earnings Before Interest & Taxes (EBIT)
$5.6 Million (5% Margin)
Continued investment in R&D tied to revenue growth (6.3% of revenue)
Net Income $3.8 Million (3.3% Margin)
33% Foreign business tax rate
We developed a range of projections based on high and low end expectations. The following is our conservative (low end) eight year estimate of potential performance
Financial Considerations/Projections
6
Financial Economic translation risk Intellectual property risk Currency exchange rate fluctuations Market share growth estimations HIV/AIDS pandemic
Key Risks to Achieving Financial Goals
Political & Technology Political/Corruption Internet Recurrence of Electricity Crisis Human Capital Flight Scale Economies Process Improvements
As in all new business ventures, an overarching risk is one of Execution: Even the best plans can’t bring themselves to fruition - if we can’t
execute the plan, we will not be successful in this Emerging Market!