Creativity, Innovation & Entrepreneurship

BMB-106
Unit -2 (Lecture -7)
Case Studies
Daniel Platt Limited: A Case Study in Engineering
Entrepreneurship

Introduction
William Wilkes, Roof Tile Technical Manager at Daniel Platt Limited and
an experienced brick layer and roofer, recognized the problem precisely.
“Builders using clay roof tiles often find that they cannot get the roof
tiles they need when they need them, especially when working on the
valley area of a roof where two pitches meet.” During 170 years of
Manufacturing natural clay floor tiles Daniel Platt has had to adapt to
market needs in an
Entrepreneurial way on many occasions and this problem for builders
presented an opportunity to create new customers.
The move into the niche market for clay roof tiles was one such
entrepreneurial response
When the wider market for ceramic products became increasingly
competitive. Having made the move, maintaining a strong, distinct
position in the selected niche was vital in order to maximize the value
of the opportunity. The introduction of a flexible product design would
enable the right products to be available ex –stock. Routinely builders
might have to wait for up to eight weeks because a particular
specification to fit the pitch of the roof they were working on was not
available. The implications in terms of time lost and negative cash flow
are significant as jobs cannot be completed within contractual terms.
Producing only one type of fitting instead of three would reduce stock
levels and improve product availability resulting in more satisfied
customers and increases in sale revenue.

The Engineering Issue

Roofs are constructed with different levels of pitch (slope), most

commonly 40, 45 and 50
Degree pitches, each one requiring a different ‘fitting’ which is in fact
the term used to describe the angle between the two wings of a valley
tile. The task was to design a single tile that would fit all three angles.
“It was relatively easy to get it right for two angles but all three
required more consideration to ensure the aesthetics and the
functionality of the tile were right”, William Wilkes explained. The
process began with a cardboard template, progressed to a metal
angled support plate And then to a piece of extruded clay placed on the
support plate and cut to required shape.
Different angles were tried and tested on a metal frame roof
construction fitted with boards and tile laths and located within Daniel
Platt’s manufacturing facility. The selected best fits were then fired and
placed on to the test roof. It was a long and meticulous design
Engineering process. As the valley tiles do not feature the ‘nibs’ that
hold regular roof tiles on the laths, precision engineering was essential
as the valley tiles at every angle must be supported by the regular
tiles.

Innovative Actions Support

Daniel Platt’s capacity to exploit the opportunity was considerably

enhanced by the support of the Innovative Actions Programme, West
Midlands. This regional development agent provided a mechanism for
encouraging companies to think differently and for making innovation
‘real’ and effective. Daniel Platt’s entrepreneurial skills and engineering
capability were boosted and a product that may have otherwise never
reached the market was successfully created. The team provided David
Platt with funding to support the research and product development
processes including a coaching and mentoring service. The universal
valley tiles are currently on test with the building trade and positive
feedback is already being received. Sales of roof tiles are now providing
customers for one third of the company’s total output.

Questions:

1. Discuss which entrepreneurial characteristics are needed in this case for successful
entrepreneurship.
A Case Study in Entrepreneurship (Small Business Set
Up)

In the last few decades, technology has had significant influence on

day-to-day life especially of oil rich countries like Saudi Arabia. The
tremendous increase in the buying power of the average Saudi
consumer has promoted flooding of the Saudi markets with the latest
brands and models of consumer durables, computers, mobile phones
and cars.
The Government also aggressively took up computerization of its
processes, which particularly raised the demand for computers to a
great extent. As a result, it has become increasingly challenging for the
computer suppliers and service providers to cope with this rising
demand. Saudi Arabia is a vastly spread out country with population
mostly localized in towns and cities. These towns are located several
hundred kilometers from each other, and the offices of the computer &
electronics suppliers are located in the main cities, from where they try
to cater to the demand of the region around them. With increase in the
number of computers, the demand for maintenance and after sales
service has also grown tremendously and the geographical limitations
mentioned above has
Severely affected the quality of service available to the consumers.
Faisal Al Buraidi is young college student, pursuing his bachelor course
in business and economics from Qassim University in Saudi Arabia. He has
been observing the progress made by some of the entrepreneurs in the
region and he considers them as a role model. Before joining the
Business School, Faisal had completed a Diploma in Computer Science,
and parallel he had worked for two years as a maintenance technician
for a small firm. He had acquired good amount of experience in repairs
and maintenance of printers and photocopy machines, and he is
aspiring to set up his own service centre for these equipments. This
also prompted him to join the Business school, to formally learn
business management, before he actually starts his own business. He
has also decided the name of his company Quasim Electronics
Company.
Qassim province occupies a large central part of Saudi Arabia. Its
capital Buraidah is well known for its dates production. Other major
cities in and around Qassim include Unaizah, Majmah, Zilfi, Bukairiyah,
Methnab etc. There is a sizable population of computer users in these
cities. Faisal is aiming to set up his service centre in the city of Majmah,
which is 150 km from Buraidah and 250 km from Riyadh, the capital of
Saudi Arabia. Currently these towns depend upon support services from
Buraidah and Riyadh in and around Qassim include Unaizah, Majmah,
Zilfi, Bukairiyah, Methnab etc. There is a sizable population of computer
users in these cities. Faisal is aiming to set up his service centre in the
city of Majmah, which is 150 km from Buraidah and 250 km from
Riyadh, the capital of Saudi Arabia. Currently these towns depend upon
support services from Buraidah and Riyadh.
Faisal has decided to start his activities with maintenance of printers
and photo copy machines, and later expand it to computers and other
peripherals. He made a survey of the market potential in Majmah
region and the prospects looked promising. There are several schools,
colleges, government offices, private companies, professionals and
individual users of computers and printers who are regularly requiring
maintenance services. There is also a large military base in the region
that is a heavy user of these equipments.
The maintenance services for printers are rendered by companies in
Buraidah and Riyadh. The current daily demand is around 10 to 12 calls
per day. The calls get attended in 2 or 3 days, and sometimes they may
take even one week to get resolved. The demand is expected to grow
at a rate of at least 10% every year.
There are two types of service offerings available for the customers – a)
Annual maintenance contract, which assures that the technician visits
the site within one day from the date on which the complaint is lodged,
and b) On-call maintenance visit in which the maintenance technician
may visit within 3 days. The cost of spare parts that may be required
for replacement, are charged separately in both cases.
Faisal beliefs that if he sets up a service center in Al Majŵah, he could
have a lions share of the printer maintenance service business in the
region on account of proximity to the customers, timely response,
ability to provide temporary replacement of defective printers,
competitive service rates, and Quality and Reliability of service (with
warranty). He expects that his business would grow from 3 to 6
maintenance calls per day in the first six months to at least 10 calls per
day by the end of the year, at a charge of 200 SR per call. Cost of
spares will be additionally borne by the customers, and it will cover the
value of spares, taxes if any and the transportation cost. He also
expects an annual growth rate of 10% growth in his business. After two
years, Faisal also wants to start sale of Canon printers. He estimates to
sell 3 to 4 printers per day, with a commission of SR 400 per printer.
Faisal is planning to set up his service centre at Majmah. He has
estimated that he will require a space of around 100 sqm for his service
centre and office. The office rent is SR 40000 per year, and the annual
electricity and telephone bill is estimated to be SR 12000. Other
investment required is as follows:

Furniture for the workshop: SR 8000

Furniture for the office area: SR 22000
Computers, photocopy machine, scanner, fax machine, internet router
etc.: SR 33000
Transport vehicle: SR 20000
Maintenance Tools and spare printers for replacement: SR 6000

Faisal is planning to break down the investment in two phases. The first
phase will be for two years and the second phase will be from 3 to 5
years. In the first phase, he will invest 60% amount on furniture,
computers, photocopy machines, scanners, fax machines, routers etc.,
and balance 40% after two years. However, he will need to purchase
the transport vehicle and maintenance tools and spare printers right
away at the time of starting the service centre. The cost of fuel and
maintenance of the transport vehicle is estimated to be SR 6000 per
year for the first two years, and SR 8000 in the second phase.
The maintenance activity will be performed by trained technicians.
Faisal will need to hire 2 technicians in the first phase of two years, to
handle up to 5 to 7 calls per day. From the third year he will need 4
technicians when the demand goes up to 10-12 Đalls per day. The
technicians salary will be SR 3000 per month. Faisal will also need an
office boy cum driver at a salary of SR 1500 per month, for
miscellaneous activities. He has already identified a few good
technicians from his previous contacts in the industry, to work with him.
An average annual raise of 10% in salaries should be planned for the
technicians and the office boy. The maintenance activity will be
performed by trained technicians. Faisal will need to hire 2 technicians
in the first phase of two years, to handle up to 5 to 7 calls per day.
From the third year he will need 4 technicians when the demand goes
up to 10-12 Đalls per day. An average annual raise of 10% in salaries
should be planned for the technicians and the office boy. Faisal
believes that in the initial days, the marketing of the company will be
done by personal meetings, phone calls and distribution of leaflets. The
estimated cost for this effort is SR 3000. Once the company is well
established, the awareness will spread by word of mouth and
references. Faisal is considering two options for raising the capital for
his business. The first option is Banks which are giving loan of up to SR
50000 at 6% interest. Other option is that of Investment companies
that are giving any amount of loan at a rate of 2.5%, but they expect
an equity holding of 20% in the Business. Faisal has SR 40000 in his
savings bank account, so he needs to weigh the two options of funding
carefully.
Questions:

1. Evaluate the available funding options and recommend the

appropriate option for the
Company.