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Bus Service for Disables (BSD) Public Transportation for Disability People In Jeddah, Saudi Arabia

Re: Business proposal plan on public transportation for disable people in Jeddah, Saudi Arabia

Attached is a document of the business proposal plan for public transportation for disable people in Jeddah, Saudi Arabia. The plan describes detailed description of the initiative, proposed organizational structure, the actual market analysis, proposed marketing plan, financial/ resource requirement plan, financial feasibility proposed requirement plan, financial feasibility analysis including latest method of financial projection, implementation/ proposed operating plan, key performance measures and summary of strengths and weaknesses of the proposed business plan. There is also evaluation of risk in the business and at the last alternative sources of funding to start the business.

I wish that you would review the proposed plan for coming meeting with me. My recommendation is to start the business immediately because there is huge gap in target market and we should exploit the opportunity as soon as possible.

Contents

Executive Summary. 1

Description of the Initiatives. 2

Organizational Structure. 3

Market Analysis. 5

Marketing Plan. 6

Financial/ Resource Requirement Plan: 7

Financial Feasibility Analysis. 9

Assumptions Table I: 9

Depreciation Table II. 10

Cash Flow Analysis Table III. 11

Implementation operating plan: 14

Key Performance Measures: 15

Summary of Strengths and Weaknesses and Risks. 16

An alternative source of funding: 16

Strong Case: 17

References. 18

Executive Summary    

This project is designed for the disable people residing in the city of Jeddah by the government of Saudi Arabia. This concept is devised by the Saudi Arabian General Investment Authority (SAGIA) in Jeddah in the best interest of the people. This project is initiated after the data generated by the independent authority working closely with the transport authority of  Jeddah and conclusive remarks were passed which suggested that a separate facility for Disabale and old was needed to help the aging population in Jeddah.

 It was suggested that disable commuters travelling in other paid bus services have been facing discrimintion and number of complians had increased over the time. This project will be finaced totally by the government. Government can provide the bulk of funds but  government will secure some funds through loans from a local bank. It is epected that this project will cost about 1.8 million Britsh pounds and out of this governmnet of KSA will secure loans of 0.9 million Britsh pounds and rest will be cash funding form government (Peck, 2010).

 The detailed financial anlaysis of the project is conducted and cash flow annlysis and financial statements are constructed to anlayze the  targeted demand with the provision of service (Peng, GLOBAL, 2015). Based on analysis , it was concluded that this project will cost a hefty sum in terms of depreciation and the capital costs it can also be confirmed that the all the proportional changes and the specific trends focus on the point of reducing debt and increasing equity as summed by the five year analysis and government will have to finance the project for life. The revenues figure is an imagunary figure, and shows the total sales which could have generated, if the‘Bus Service for Disables’ (BSD) had been charging for services.

 In addition,  government must have enough resources to fund this project in case of any uneven economic situations or recessionary phases. Because, recessionary phases wipe out the funds and liquidity and such project scould be in danger, so, separate pool of investment is desired, if this project is to be initiated.

Description of the Initiatives

This project is a unique concept device for the disable people residing in the city of Jeddah by the government of Saudi Arabia. This concept is devised by the General Arabian Investment Authority (SAGIA) in Jeddah in the best interest of the people. This is the part of the renewed efforts by the Kingdom to facilitate the lives of it ordinary citizens (ARAB NEWS, 2016). This new development is the initiative has been identified as a royal decree to all the government ministries to use the government endowment to provide incentives to the locals in Saudi Arabia (Planet, et al., 2012).

This is good to serve people, which are disable and cannot contribute in economy success. The most important thing is to try different initiatives to let those disable people to contribute in economy success according to their credibility and potential. This initiative by the Saudi Government is a good initiative to increase role of these disable people and provide a plat form for them to grow and gain success for a long run.

For Instance, this new program can let all people to have effective and lucrative transportation facilities. There is a need of special service for these disable citizens, which has been considered by Saudi Government to provide benefits.  This is necessary for a society to contain different institutes, which can provide benefits to disable people. This is a good initiative to eliminate a society, which hushes up the voice of weak. The purpose is to guide these people towards right path with immense motivation through government assistance.

Since, there have been no adequate systems existing for disable and elderly people in the city therefore this is a welcome move, which will contribute largely towards improving the transportation facilities for the disable people in the city. This project is a testimony of the commitment from the government to improve the welfare of the society and provision of the best first world conditions for its citizens (Al-Jadid, 2013).

This is a new project and currently it is in the pipeline and General Arabian Investment Authority had the meetings with the local transport authority and the contractor who would be building the separate track for the bus service (Gradus, 2012). This concept is unique because it is free and secondly, it will be extended to all the possible bus routes in the city. So, all the citizens residing in the city are expected to get benefit from this new project (Caltenco, Hedvall, & Larsson, 2014). 

Organizational Structure

This new development ‘Bus Service for Disables’ (BSD) will be working under the General Arabian Investment Authority (SAGIA) and will have to report it. But, overall, it will be working autonomously and will have a director of operations (DG) who will head the project. Defining the structure of any start-up is of paramount importance and various roles and duties are documeneted for th company from the beginning (Hull, 2013).  This organization will have folllowing structure:

Figure 1: Self Art

The top level: Managing Director- The job is to develop strategies

The secondary level is Deputy Manager Operations for all kinds of operations being done within organization. The whole dealing of employees is being made under the manager operations effectively. The second level aspect is Deputy Manager Finance with proper aspect through managing investors to support operations in organization.

This is necessary to have a good structure of newly developed bust services for disable people in Saudi Arabia. This is vital for the government to consider effective management with different professionals. The most important thing is to develop this organization with a strong structure and culture, which can bring a real change in society. The change should be seen in this society and these initiatives will be justified in future.

It was believed that carefully crafted structure will ensure that project remain transparent and is fully audited every quarter by the independent body selected by the General Arabian Investment Authority (SAGIA). This will be expected to gravitate the management towards the clearly defined ideas and  direction for the project and BSD will have total 60 buses and there will be bus service running from 6 A.M to 12 P.M. and there will be 250 employees working under this project.

This is a fact that a good structure of any organization will lead all stakeholders towards success. For Instance, the bus services for disabled people in the Saudi Arabia is a good initiative, but needs to be pertinent with its strategy, which is to build diable people to contribute to economic success and improve living standard. It will be based on its organizational structure, as it can carry all stakeholders with same strategies and goals.

The deputy manager, operations are expected to formulate the operational activities and will work closely with finance manager to ensure that project works smoothly. Finance managers have a great track record as he headed many projects prior to this as finance managers. DG has working experience on similar projects in Qatar and Dubai Metro. Deputy Operation Manager worked as a deputy manhngers in Chandigarh metro India, and has extensive experience of running such projects.

Market Analysis

This service will not have any other competeitors, since it is a free service, therefore, unless the company decides to not use all the possibel routes, it can fcae decline in number of users as it wont be possible for comuters to first pay through once bus and reach BSD netowrk and use it. BSD is expected to be highly successful as there have been data generated related to number of disable commuters travelling in other paid bus services every day and have been facing discrimintion and number if complians have increased over the time. This data was generated by the independent authority working closely with the transport authority of  Jeddah and conclusibve remarks were passed which suggested that a separate facility forDisabale and old was needed to help the aging population in Jeddah (Caltenco, Hedvall, & Larsson, 2014).

Therefore, based on this information it is expected that service will be highly beneficial for the needy and it is needed in the city. In addition, as number of  foreign tourist all vsisit the city and number  of them are usually in very old age, therefore, it is believed that commuters numbers will definitly will be high and  will help them in commuting across the city.This servie is free, so there will be no charge for the disables and old people. People over 60 will be considered old and all they have to do is to show the card to the bus driver to prove their age to use the service. In short, government will be responsible for all the expenditure and funds will be allocated to the suthorities for capital expenditure, salaries and other maintenance services (Gradus, 2012).

Marketing Plan

 It is expected that Jeddah tarnsport authority will comnduct extensive publicity for the project. Since, Suadi governmment has been facing acute problem to balance their books after the continuous decline in the oil prices which have forced the government to cuts the spending and apply the auterity measures. Since, the government runs a welfare states and after announcing the enormous budget cuts, governmnet has faced great crtiticim. Therefore, it is expected that government will run extensive media compaign to tell the Suadi public regarding this new project for the disables in Jeddah to promote its soft image (Loyn, 2011).

Marketing Mix

Product/services

In a marketing plan, this is an imporant aspect. the service for diable people in Saudi SArabia is to provide quality and effective transportation for doable people. This is a key services along with different cards, to be issued to deserved people. This is to mention that quality is not to be compromised regarding this service to depict change for a long run. The service is to be initiated to serve people and avioid frustration from socoiety, which has to be justigfied. It will be elaborated in marketing plan, as it is a key aspect to consider for the management.

Price

As mentioned, this service is regarding disable people in the Saudi Arabia. This is planned by marketing management that the management with come up with penetration pricing staegy for customers. This is true that these people are not able to deal with high rates of transpiration in a county. The purpose will be justified with effective and efficient procingb with low cost services.

Place                                                                                                                   

The placement has significance in this project, as the management has a plan to expand in all cities of this country to serve disable people. Obviously, the disable people can be seen everywhere and the purpose is to provide services with any trouble.

Promotion

The advertising will come into the life when the management will look forward to consider different traditional and social media channels. The purpose is to attract the customers and let them know that the governet is cvaring for them. the promotion iwill include free services on different national events ie well. This will be a perfect combination of traditional and modern media chanels to atttract aand convinec diable people to aqquire these services.

There will be separate allocation for the adverstising for the project:

Electronic Media campaign: Goevernment will show the short ads on local Jeddah TV for advertising.

Newspaper Ads: Ads will be given in the newspapers to make awareness among the public regarding routes and facilites provided onbaord.

In addition, the diasble people residing in the city will be informed regarding the bus service to inform them about this service.As this is a free bus service, therefore, agenda is not to take market share but to get credit for this free service started for the disable services.

Financial/ Resource Requirement Plan:

            Depending on the business proposal and feasibility study conducted, a new business can find number of sources to finance its business operations. Bus services come under the service industry category and there are three different types of capital, which are required, form managing its operations.

Fixed Capital: The BSD must have adequate funding to buy the fixed capital such as building, Buses, Maintenance center and Bus Depot.

Working Capital:BSD will also require a working capital to manage its operations and must possess enough liquid funds to balance its budget and annual planning.

Funds generated through multiple sources could be categorized into two main forms:

Equity

Equity capital can be generated by issuing shares. It totally depends on the investors that how much he trusts the venture and risks associated with and provides equity capital based on risk analysis. Equity holder has right to owner ship of the business. Some sources of equity funding are:

  • Personal Savings
  • Partners
  • Family and Friends (F&F’s)
  • Venture capital companies
  • Public stock sale
  • Corporations

Debt

Debt is another source of funding which requires the borrower to repay the funds with interest. By securing the debt, business creates a liability that has to pay being considered expensive as compared to equity financing. Some of the sources of debt capital are:

  • Trade Credit
  • Commercial banks
  • Equipment Suppliers
  • Saving and loan associations
  • Commercial finance companies

Based on the requirements and risk associated with the business and availability of the finds from different sources, a business can secure loan from any of these sources. The lender must be satisfied with the viability of business plan to grant funding (Loyn, 2011).

However, for this project all the money is generated from government. Therefore, it is government’s discretion that from which resource, it wants to fund the project. It is assumed here that government is allocating major chunk of the investment form its own resources and rest of the funds are generated from a bank as loan (Peck, 2010).

Financial Feasibility Analysis

This section reflects the financial feasibility of the project. For this purpose, some assumptions are taken into considerations that are given below:

Assumptions Table I:

Assumptions
   
Depreciation Straight-Line method is used  
  salvage values for building and equipment is 750000 and 650000 respectively  
   
  Useful life for building is 20 years  
  Useful life for Buses is 15years  
Cost of capital 12%  
Interest  on loan 0.02  Only interest will be paid in first 5 years, After years, 2% of the principal amount will start getting repaid
 
Total Bank loan $900,000.00  
Interest payment $18,000.00 per month  
Yearly payment 240000  
Inflation rate 2%        

Depreciation Table II

Depreciation          
Buses and Equipment -$ 2,000,000.00  $        12,500.00  $        12,500.00  $        12,500.00  $        12,500.00
Building & Depot -$     100,000.00  $        23,333.33  $        23,333.33  $        23,333.33  $        23,333.33
Total    $        35,833.33  $        35,833.33  $        35,833.33  $        35,833.33
Net PPE    $  1,764,166.67  $  1,728,333.33  $  1,692,500.00  $  1,656,666.67

Cash Flow Analysis Table III

Bus Service for Disables (BSD) Cashflow Analysis
  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Buses and Equipment -$  1,000,000.00  
Building & Depot -$     800,000.00  
Revenues  $  1,200,000.00  $  1,500,000.00  $  1,600,000.00  $  1,650,000.00 1,680,000.00
Less:  
Bus Auto Serves -$     520,000.00 -$     550,000.00 -$     580,000.00 -$     610,000.00 -640000
Gas Cost -$        30,000.00 -$        35,000.00 -$        40,000.00 -$        45,000.00 -50000
Supplies -$     500,000.00 -$     550,000.00 -$     600,000.00 -$     650,000.00 -700,000.00
License Fees -$        15,000.00 -$        16,000.00 -$        17,000.00 -$        18,000.00 -19000
Total -$  1,065,000.00 -$  1,151,000.00 -$  1,237,000.00 -$  1,323,000.00 -1409000
Depreciation  
Cost (Building)  $        12,500.00  $        12,500.00  $        12,500.00  $        12,500.00 12500
Equipment  $        23,333.33  $        23,333.33  $        23,333.33  $        23,333.33 23333.33333
Add back:  $        35,833.33  $        35,833.33  $        35,833.33  $        35,833.33 35833.33333
Net Income  $      170,833.33  $      384,833.33  $      398,833.33  $      362,833.33 306,833.33
Plus: Building Salvage Value 750,000.00
Plus: Equipment Salvage value         650,000.00
 Cash Flow’s -$  1,800,000.00  $      170,833.33  $      384,833.33  $      398,833.33  $      362,833.33  $  306,833.33
Interest payment on bank loan -$     240,000.00 -$     240,000.00 -$     240,000.00 -$     240,000.00 -$ 240,000.00
Net CF’s -$  1,800,000.00 -$        69,166.67  $      144,833.33  $      158,833.33  $      122,833.33  $    66,833.33
NPV ($1,354,692.36)  
IRR 73%  
Payback period 1.6 Years
  Year 1 Year 2 Year 3 Year 4 Year 5
Current ratio 8.65 8.26 8.36 8.65 8.75
Return on Equity 0.09 0.22 0.23 0.21 0.76
Return on Assets 0.04 0.1 0.1 0.09 0.08
Cash ratio -0.34028 0.551389 0.609722 0.459722 6.059722

            Based on the detailed anlaysis conducted the revenue shown is basically  will be the ticket issued but not money will be received but it will be helpful in generting the total revenue as BSD is determined to know the total cost paid by the BSD in financing the service (Walker & Butler, 2010).

Implementation operating plan:

            Once, the initial plan is crafted, it will require a road map to implement the plan devised. For this purpose, a committte wil be formed which will be headed by the General Arabian Investment Authority (SAGIA) officer reviewing the proposal (ARAB NEWS, 2016). He will first appoint the key people on the important posts such as

  • Director operations
  • Deputy director operations
  • Finance Manager
  • Procurement Manger
  • Service Quality Assurance Manager

This process will require at least a month. First, advertisment will be published for these key posts, interviewes will be conducted and final hiring will take place atleast a month or so. Once, key posts are sorted, drivers for buses will be hired. This process wil take minimum 2-3 months in completeion because it is a lengthy process for recruting the right people to drive disable people and their assistant who will assist in loading and unloading of the passengers However, meanwhile, the procurment manager will consult the different companies across the world forbuying 60 buses. This will constitute key negotiations, because this process deals with the capital spending in this project (Peng, Global Strategy, 2013).

In addition, the the place for building the Bus depo will be selected and new building will be buil, which will require minimum of 6 months time duration. Finally and most importantly,  the work related with the making a sperate lanes for buses in areas where they are missing will take atleast a year. So, most of the proceess will be completed with in a year (Walker & Butler, 2010).

Key Performance Measures:

It has been seen in the past that no doubt that it takes a lot of effort to start a project and successfully complete it and impement it but what is more important in this aspect is themeasurment of its success factors and ensuring that expected quality is not only maintained but also enahnced. This requires that adequate systems are created which are good enough tomaintain the quality of service. Therefore, to ensure quality, a Quality Assurnace department  will be established and some parameters will be designed to check the quality of the bus service. This will include

  • The feedbacks from disables passengers,
  •  A reviewal through cameras installed in buses.
  • The timings of busses will be monitored
  •  Punctuality of driver
  • Conditions of the buses will be monitored to ensure that disable people get the best facilities possible.

In case of any deviations form usual procedures, a corrective actions will be adviced and new proposals will be given to avoid any such issues in the future.In case, if BSD lacks in this department, it will miff the disable people and will kill the objective of the bus service, therefore, it is crucial that key performance measure procedure are followed and quality servie officers work colsely with the bus drivers and assistanst to improve the services in BSD.

Summary of Strengths and Weaknesses and Risks

            This project is designed to facilate the elderly and disable people of Jeddah, though, the project is supported the government but the source of funding from governmnet are the funding from governmnet endownments and debt issued form bank. This is the biggest negativity of the program because it is dependent on debt and debt must be paid back and ultimate payer of debt is government itself because government is not funding entirly with cash from its own pocket. So, the biggets concern is:

  • What if oil prices go further down and government struggles to balance its budgets, it will put extra pressure on governmnet to deal with its finances and pay debt on loan every month.
  • Secondly, if governmnet fails to diversify its investments and cannot create enough alternate sources to fund its operations, it will struggle to cope with the payment of the project. It will have to pay salaries and all administative and other expenses of running thi sproject and it could be a heft sum.

An alternative source of funding:

       Therefore, there must be a complete agreement on provision of funds even in case of the any macroeconomic problem to deal with issues, so, there should be a sperate pool of funds which can help the government in financing its operations. Otherwise, this projet will fail to continue in long term. In addition, government could decide that there is a specific investment abroad or specific source from which the expenses for this project are paid from.

Consideration of Implementation, Operations, Marketing and Financial Issues:

at lowest level whenever business have pre thinking about managing business with only available resources only. The available resources as well best one is determining business needs and The first things that should be enough for making a successful business plan is about the way of managing the responsibilities. The consideration towards implementation of business plan means there should be proper ways of implementation and it is possible through allocating responsibilities with best way.

 The proper organized way of operation within organization is best one to successful implementation of business plan activities. The production process should have relevant hires and suppliers should have proper way fo selection. The proper consideration about the marketing aspect is to evaulate functsions that show either business plan would be beneficial for strategic advanatge marketplace or not. The marketing aspect should be supportive towards day to day operations as well. Thee financial issues would be costs in proper way.

Strong Case:

Finally, the business would be successful if business harness afore said plan in detail. One can say that it is not possible to be a market leader from one day but it is inability to do not develop in 100 days. The organization consider as successful whenever it created a new things in timeline to access in best way. The approach of business is realistic one because it can assure through specific way while dealing with specific function related to organization. The strong case would develop when there is no communication gap between different departments to ensure accountability.

References

Al-Jadid, M. S. (2013). Disability in Saudi Arabia. Saudi Med J, 34(5), 453-460.

ARAB NEWS. (2016). SAGIA introduces new licensing program for innovators. Retrieved April 23, 2016, from http://www.arabnews.com/corporate-news/news/913431

Caltenco, H., Hedvall, P.-O., & Larsson, A. (2014). Universal Design 2014: Three Days of Creativity and Diversity: Proceedings of the International Conference on Universal Design, UD 2014 Lund, Sweden, June 16-18, 2014. IOS Press.

Gradus, Y. (2012). Desert Development: Man and Technology in Sparselands. Springer Science & Business Media.

Hull, P. (2013, February 6). Retrieved November 06, 2015, from Forbes: http://www.forbes.com/sites/patrickhull/2013/02/06/why-defining-a-corporate-structure-for-startups-matters/

Loyn, D. (2011). Frontline: Reporting from the World’s Deadliest Places. Summersdale Publishers LTD .

Peck, M. C. (2010). The A to Z of the Gulf Arab States. Scarecrow Press.

Peng, M. W. (2015). GLOBAL. Cengage Learning.

Peng, M. W. (2013). Global Strategy. Cengage Learning.

Planet, L., Ham, A., Butler, S., O’Neill, Z., Pozzan, O., Robinson, D., et al. (2012). Lonely Planet Middle East. Lonely Planet.

Saptco.com.sa. (2016). VIP Service. Retrieved April 23, 2016, from https://www.saptco.com.sa/Buses/vip.aspx?lang=en-US

Walker, J., & Butler, S. (2010). Oman, UAE & Arabian Peninsula. Lonely Planet.

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