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against the dollar). The future trends suggested that the index would continue to rise, with
a further strengthening of the dollar, though no economic forecast could provide accurate
figures with which to work.
Table 11C $/£ index and movements in low cost generator market size by year
with year 5 most recent.
1
2
3
4
5
Index
100
120
130
105
145
Market size
50
70
80
45
90
(£ mill)
Expansion in developing world markets was an option that the company had considered.
Its main sales area were Syria and the Lebanon and these core markets could possibly be
expanded via the recruitment of further overseas agents. On the basis of past experience
overseas business would only slowly develop, and the directors considered that it was
unlikely that the new markets would grow more rapidly than £40-50,000 per year. The
costs of recruiting and maintaining a new, technically trained, international sales
representative would be around £40,000 a year, taking into account the very high travelling
costs that would be involved.
Herbert Engineering had the expertise to provide more sophisticated equipment than local
suppliers and competed against the medium sized integrated power supplier
manufacturers. However, these companies tended to concentrate on servicing medium
and large customers. By concentrating on smaller customers, such as nursing homes,
hotels and leisure centres, large private homes, and plant nurseries, Herbert Engineering
provided a specific and profitable service. The market size for these services was growing
slowly but steadily throughout Europe, as Table 11D shows. The most rapid growth had
been in the eastern part of Germany. In the longer term, though the market would continue
to grow, it was not likely to show significant volume increases, but rather to be more
demanding in the sophistication of the control systems that were available; and how these
would be integrated into overall company energy management.
Table 11D. European market growth by year and country, all figures in £ million,
year 4 the most recent.
Year
Country
1
2
3
4
UK
25
27
30
35
Germany
15
32
47
69
France
31
37
43
41
Italy
24
18
16
22
Spain
45
60
80
62
Other
91
90
83
111
Herbert directors felt that they could do substantially more business in Europe than
currently. However, this would mean further investment in European sales representatives
who could improve the amount of direct business for the company; instead of relying on
architects and other intermediaries. To effectively exploit the European market, the
directors thought they would eventually need three further sales representatives. Each
would cost around £30,000 in salary and expenses. On the basis of the business that the
company had so far developed in Europe, the directors felt confident that each sales
representative could sell 10 sophisticated systems in the first year, 20 in the second rising
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