Name: _Abhishek Raj

Reg no 12108054

Instructions
Please write your name on the top right corner of each sheet.

Test Format
• Total Points: 30
• Test Duration: 45 Minutes
The test presents a case study containing a set of facts that need to be assimilated to
answer the questions as per the instructions provided. You are welcome to make your own
assumptions to support your arguments. Please be as concise and neat as possible.

Case Study
Facts
• After intensive research and study, you – an entrepreneur – have decided to enter the
automotive parts manufacturing sector in the United States. More specifically, you plan to
set up your own manufacturing operations to produce innovative and customized brake
components including, but not limited to, brake pads, brake shoes, brake rotors, brake
drums, and brake systems.

Exercise
As the Chief Executive Office (“CEO”) and Chairman of your company – Brakes, Inc. – it is
your responsibility to make critical decisions (and execute appropriately) to maximize the
chances of success of your business operations. Please answer the following questions in
the space provided.
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Case Study

A. Manufacturing.
Keeping in mind that your own personal savings can only cover about 5 percent of the
estimated capital requirements, please list as many key decisions as possible – at least 7 8
– for the successful launch of your production activities.

Ans-Keeping in the mind that I have to my personal saving cover only 5% of the capital
needed, I will need to make careful and decisions to successfully launch the production
activities.
1.Source of Funding- Since our personal funding is only 5% And 95% of the fund, I need
external sources to raise the remaining. So, we can include Bank loans Ask for credit lines
or loans from commercial banks.
Crowdfunding: I can go for digital platforms like Kickstarter or GoFundMe to raise smaller
amounts from multiple investors.
Government Grants and Subsidies: we can also go for research for the government
initiatives that support manufacturing companies, particularly those in the automotive
industry.
Angel investors or venture capital: We can pitch our business plan to investors who may
offer funding in exchange for equity.
2. Factory set up or site selection: The location of the manufacturing plant is an important
decision. Our factory should be close to the raw materials suppliers to minimize
transportation expenses, locate the production near suppliers of brake component
materials (rubber, steel, etc.). We should also look for skilled labor, especially those with
automotive or mechanical skills, to be available where we are setting up our factory.
3. Infrastructure of the Factory: The place where we are opening our factory that place
should have easy access to dependable utilities like water and electricity, as well as
transportation hubs like airports, railways, and highways for efficient movement of raw
materials and completed goods.
4. Technology and Equipment: By investing in high quality machinery, Swe can go for
automation which will implement automating parts of the production process to improve
efficiency, reduce labor costs, and ensure consistent product quality.
5.Relation with Supplier: We can build strong relationship with suppliers to ensure timely
delivery of materials and maintain a steady flow of production.
6. Financial Planning: Financial planning is the most important part of any organization. We
must create a detailed financial plan to forecast cash flow, capital expenditure, and
operating expenses. And we should also Regularly track production costs and identify
areas for cost-saving measures, such as energy efficiency or waste reduction.
b) Customers
Describe the type of customers you would target and the activities your company would
undertake to acquire customers. Note there are already three other major auto parts
manufacturers serving the industry.
Ans: I will target the customers like Auto parts retailers and distributors, Auto repair shops
and service centers Automotive manufacturers (OEMs)Performance/aftermarket parts
retailers.
Activities to Acquire Customers:
Offering Sample Products: We will distribute free samples to our potential customers or
automotive influencers. We will allow them to test the products and evaluate our products,
which can build trust and establish credibility.
Developing Partnerships: We can also do partnerships with car dealers and service
centers. We can offer them favorable conditions to market or sell our brake products only.

Customer Testimonials and Reviews: We can show the customer review of our customers
for new customers, because positive feedback can build trust with new prospects and help
you acquire more clients.
c) Pricing Strategies
Assume that in your quest for customers, you come across a potential customer interested
in purchasing 1,000 brake rotors from Brakes, Inc. Regarding pricing of each brake rotor,
you tell the potential customer that the cash price of each rotor is USD 50. In other words,
the potential customer can walk away with 1,000 units in return for cash today upon
payment of USD 50,000. The customer agrees and a deal is struck.
The very same day, another potential customer also expresses interest in purchasing 1,000
units of your brake rotors but states that it will require 2 months to be able to make the
necessary payment. You agree to sell on account and prepare an invoice to be paid in 2
months’ time at a price of X dollars per brake rotor. Will the price X dollars be equal, less
than, or greater than the 50 dollars you charged the first customer? Explain your reasoning.
(Assume ZERO credit risk, i.e., no risk of default by the customer)
Ans- In the situation we have two customers one that is paying same day and other need to
pay after 2 months to make the payment The cost of each brake rotor for the second
customer would exceed $50. The idea of time value of money, which acknowledges that a
dollar now is worth more than a dollar tomorrow, provides the foundation for this. By letting
the second consumer pay later, you are essentially giving them a loan even if there is no
risk of non-payment. The potential cost related to the time delay should therefore be
reflected in the price of the delayed payment. For instance, the increased price would
make up for the missed investment opportunity if you were able to invest the $50,000
somewhere else and get a return in those two months.
d) Risks
With respect to your business involving the manufacture and sale of innovative braking
solutions, list the primary risks that you face. Explain the risks in plain language – specific
technical jargon should be avoided. Can you suggest some strategies that you could
employ to mitigate (i.e., better manage) some of these risks?
Ans – Risk will supply chain Production could come to a stop if there are disruptions in the
supply of raw materials (such rubber and steel).
Mitigation: We should diversify suppliers and hold buffer stock to avoid reliance on a single
supplier.
Technological Failures: If equipment’s malfunctions or defects in the production process
could lead to delays and increased costs.
Mitigation: We should Regularly maintain and upgrade machinery and invest in backup
systems to prevent downtime.
Market Demand Fluctuations: The automotive market is sensitive to economic conditions,
and a downturn could reduce demand for brake components.
Mitigation: Diversify your customer base and offer products for different vehicle types (e.g.,
electric vehicles, motorcycles).
Financial Risks: Insufficient cash flow or rising costs could affect your ability to meet
operational expenses.
Mitigation: Maintain a strong financial plan, build a cash reserve, and keep a close eye on
expenses
e) Competitive Strategies
Assume you have now been manufacturing and selling brake parts/components for some
five years now and have a good knowledge of the competitive landscape. Can you list some
strategies to adopt that could give you an edge over the competition and help you gain
market share? Explain.
Ans- For gaining a competitive edge after five years in business, you could adopt the
following strategies:
Product Innovation: I will Continuously innovate my brake components by focusing on
efficiency, durability, and safety. This will help distinguish my products from those of
competitors.
Brand Differentiation: I will Create a strong brand identity focused on high-quality, reliable
brake components. Invest in marketing campaigns that emphasize your unique selling
points (e.g., better durability, innovative features).
Customer Loyalty Programs: I will time to time introduce loyalty programs for customers,
offering discounts or incentives for repeat purchases. This will help build long-term
relationships and ensure consistent demand.
Expand Distribution Channels: I will specially investigate expanding beyond traditional
distribution channels by exploring international markets and e-commerce platforms. This
would help increase your customer base and enhance profitability.

Thank
You