BUSINESS MODEL

Human resources training will be conducted through simulation games dedicated for organizations to make them high performance organization by managing human as valuable assets, recruiting right people and engaging, deploying and empowering, evaluating, rewarding and further developing.

Business finance training includes key performance indicators, balance sheet, profit/loss statement, cash flow, working capital, value drivers, economy of scales in production, operations efficiency, and continues improvements for inline managers and other necessary specialists and strategic management and decision making courses which will simulate the situations when companies need to think over on their strategy and our customers stretch themselves in certain case works.

2.3.2. BUSINESS MODEL

ET LLC finds out customers who are in need of consulting services through its door-to-door sales team offering various services and according to the needs and necessities of the customers out of our consultants’ pool we make match and arrange another pre-meeting of exactly what our customers’ needs. Consultants may have develop or transform general consultancy policy into our customers need and necessity in shortest time period. During these sessions company organize every necessary administrative issues and other training arrangements. At the end customers receive what they exactly need, consultants don’t have to waste their time for finding customers by themselves, company will arrange everything and charge for the services. Prior that the contacts to the prospective consultants and train them with what simulations be used and try to adjust it into Mongolian situations. “Customers are king” Company gives importance to customers’ feedback and that would be one of the success factors which increase retention rates. Follow up coaching will be maintained so that retention rate remains.

Briefly whole cycle will be finding customer, collecting information and confirming training needs, conduct corporate goals initially then partial training goals, create matching analysis, formulate training plans and select suitable instructors, design course

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material according to needs and goals analysis, conducting trainings, evaluating training performance, evaluating training performance and effectiveness, follow up meetings and consultancy.

The company pays consultants and trainers for commission fee of average 30% (plus tax) for group training arrangements such as finding clients, class, facilities, and so forth. Pays 70% (including sales commission) for individual and company based case consultancy services. For statistics analysis services, company pays 50 % of total revenue. This commission fee can be negotiable in case of consultants popularity and reputation, if they arranging their own customers, or if the company does major part of consultancy and etc.

Fees be planned either charge by project solutions which basically be based on a timely basis.

Training fee will be applied on trainees’ number. Average class will be 24-30 people in a team, preferably from one company. Expected to two days (48 hours and if necessary to be extended) services or any adjustments can be done.

English courses are designed on 2 weeks period since necessary learning process requires interaction which is time consuming. Statistic research will be based on project case, depending on time and effort spent for the case charges will vary.

2.3.3. MARKET ANALYSIS

Background and Competition

Human resources in Mongolia can be a difficult matter for companies when they begin doing business in the Mongolian economy. Due to the post-Soviet nature of Mongolian Labor Law in particular and the legal system in general, a company’s relationship with its employees in Mongolia is often quite different than so called international standard. Human resources consulting is a young field in Mongolia; there was little need for HR when lifetime employment was the norm. Although this situation has been changing, yet, there are still not interesting enough for international giants. Currently there are not many consulting companies; especially in field of human resources training and not a single one covering all the fields like human resources training and consulting, business finance courses, and some marketing research related consultancy services

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under a same roof and/or all together or in a mixed version depending on customers need like ET is offering for. Worldwide well known human resources or/and other consulting companies are not interested in Mongolian market, since it is considered as too small in market size, plus, being not familiar with country situation and its low purchasing power.

On the other side, Mongolian companies will realize importance of human resources and corporate governance.

Usually consultants come through different government projects which are undertaken through international organizations such as UN, IMF, World Bank, and similar others, either through donation or long term low interest rate debt and majority of the spending are for the wages of foreign consultants. Spending for consultancy is not really competent with outcomes, thus result is not giving satisfied results for locals. For companies’ case, technology and engineering projects consultancy is preferred. But none of these cases human development consultancy is asked for so far.

There is certain numbers of foreign entrepreneurs who try to run business, not yet achieved big success because of factors such as poor network, communicational problems, or right reverse, charging high prices, but not necessarily providing the right solution and etc. There are some local freelance consultants, but usually tend not to permanently work as consultant or having hard times finding the right customers. Most importantly, most local companies try to solve problems themselves instead of applying to consultancy.

Currently, our main competitors are local companies running consultancy or training services but not too many in numbers, many individuals who are freelance consultants and trainers but services that are provided by them may not be addressing to the exact needs of customers and with different pricings. For further extension of English schools, there are domestic and international language institutes as competitors, but using our cost efficient structure we can compete with them.

Market Segmentation Large Companies

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These companies have largest training and development expenditures on human assets and the best HR departments, but not necessarily can offer intensive, competitive, most importantly enjoyable and applied courses what we can offer to them. We will approach to train their employees in consecutive trainings for different levels and different concepts.

Mid-Sized Companies

The companies are trying to develop them to be exposed on internationally, looking for opportunities to sell their products or to buy cheaper and reliable products from foreign market. We will offer trainings and strategies focused more on emphasizing weak parts of the company to be strengthened and how to be cost effective but high performing, improving its human assets in order to perform well and to grow, and show strategies to linkage to foreign business partners and etc.

Foreign Investors and Entrepreneurs

Foreign companies and entrepreneurs those are trying to open its branch or hiring people.

We will try to help them to start up their business and consult them for their certain needs like labor finding business partners, help on legal issues, necessary licenses, recruitment related consultancy and etc.

Number

Table 2. Marketing penetration plan for ET consulting

Source: The numbers of the companies are from national statistics office report.

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According to the above table, if we use average sales of 132 in a month we need nearly 3.3 years to reach 30% of targeted market, which our financial planning is estimated for initial 4 years. But if we raise the sales into 150 it may take 3 years to fully penetrate 30%

of the targeted market and 2.3 years with 190 monthly with estimation based on our 2014 years sales.

Segmented market needs

Our target companies are looking for consultancy and trainings for below reasons.

Increase the efficiency and performance of employee by training and as overall the company performance.

Explore effective ways for human assets, financial management, inline managers and employees better realizing interrelationship between the departments and the business itself.

Aiming at contact with foreign companies and run for cross border businesses, hence eager to learn and adjust its operation, products and services into international standards and English in business.

Willing to launch new product in the market and facing some hesitations in decision making, budgetary issues and so forth.

Trends observed in companies of Mongolia.

Downsize the employee size and to remain with qualified, competent but little workforce.

Replacing manpower with technology or outsource services domestically.

Learning management skills in order to engage and retain talented employees – certain prestigious companies offer less salary but retention rate is higher than those companies offer higher. The reason is the culture, working environment, policy and other factors to retain better human assets.

Develop or expand market and their customers into international market rather than domestic market, hence need highly educated human assets using English and other languages fluently for business operations.

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Location - Close to city center, close to the almost all biggest companies in the city center. Sales clerks and managers will be close to have face to face meetings which will be important for customer satisfaction.

Innovative spirit – Our Company is the company which is running on most demanded fields with good quality training simulations and other facilities.

Create a culture that encourages professionalism and self innovation.

Good networking in medical and business fields.

Good strategic alliance with Etugen University.

Weakness

Management doesn’t have much experience in consulting business and business consultancy environment of Mongolia, needs to adjust their theoretic knowledge and simulation into Mongolian soil.

Financially not sound.

Engineering equipment in 1st block is quite old. Massive construction and maintenance could cost more than plan.

Opportunity

Domestic demand in competent human force is increasing in labor market, so companies start paying attention in its own employees in order to engage and retain good quality human assets.

Companies and individuals are getting aware of competitive business environment and start investing for their education.

Foreign direct investment is increasing, therefore human capitals of domestic companies needed to be trained in international standards.

International interest is increasing, company can play bridge role in linking foreign companies with Mongolian business environment.

Threats

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Our biggest potential customers mid-sized companies’ purchasing power is not strong, may struggle in sales.

New competitors may emerge as competitors.

Market capacity is small.

2.3.5. STRATEGY

Strategy

We initially train Etugen university finance and accounting teachers and hire them as trainers and consultants in our company concerning that maintaining long term engagement and reliable relationships.

At certain extent, these two services may be provided to university students with different pricing, as well as contribution to human development which underlined in its vision, and to prepare potential future customers.

Starting from our second year the company plans to offer Business English Presentation, Business English Negotiation, Business English Writing courses.

In long run company may extend its service lines with other human development simulation and other applicable techniques.

Transparency in policy and operation.

Recruit only competent and the best local consultants and trainers, and apply for international consultants if necessary depending on what kind of expertise is needed.

Initial reputation and service quality is important in company operation and performance.

Owners/consultants of the company will get expertise on certain services such as new product development and strategic management and decision making trainings.

To protect the company copyrights, company use its networking with other consultancy companies for attempts by consultants of abusing copyrights, then take measures to reduce their credibility as consultants, try to constrict from the services industry.

Decorate the ambience as professional as possible.

Use tools for financial simulations and other consultancy software.

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立 政 治 大 學

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N a tio na

l C h engchi U ni ve rs it y

Collateral benefits from/with Etugen University can be expected such as cooperation in statistics analysis department, caterings services, other facilities and issues.

Marketing Strategy

Advertising – Direct marketing through email, yellowbook – business directory book.

Website and internet – Plan to launch new website. The web will initially be a static website provides information of company and contains necessary information and guidance to prospective customers. Initial design will give insight of professional look and competency. Once company is settled financially stabilizes the company may outsource a company that shall help to update its content on regular basis.

Permanently use open source internet tools such as facebook, twitter, youtube and other sources to attract customers and increase the awareness. Depending on the financial soundness paying for search engines could be an option.

Stationery and others – Good quality stationery with our company logo and be useful and can be exposed often. This shall contain “go green” message as well, including mugs, cups, bags, flash drivers and similar other things supporting the idea to recycle and save the nature.

Writing articles – In human development fields or in any challenging issues of companies running in Mongolia, using the company name. Make arrangements for our well known consultants and trainers to give interview in magazines and media.

Door to door sales team – The company management plans to hire, to train and to send sales clerks to the potential companies to introduce the services and simulations, showing some demo presentations and trainings in their work fields.

Pricing

Consultancy or couching for individuals XXUSD.

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Since it is based on consultant expertise we will offer 60 percent of revenue to the consultant. 5 percent for sales charge 5 percent for COGS the company profit margin is 30 percent.

Training on Business Finance and Training on Strategic Management and Decision  Making  courses  will  be  conducted  on  similar  business  and  revenue  model.    Training  and  consultancy will be arranged as a group thus charged on number of each individual. Since  we  planning  average  class  contain  more  than  20  people,  we  will  offer  30  percent  of  the  revenue to the consultant delivered service, 5 percent for sales commission and other 5 percent as other cost of goods sold as certificate, relevant promotion etc.

Trainings on Business English – Different model is designed for Business English Trainings. Considering learning language requires some time to learn and actually use in their daily life, we need to provide longer delivery session in our service.

English courses are designed to be 2 week program during weekdays after working hours. Attendees will be charged with decent and reasonable amount for decent quality service. Trainer’s fee is calculated as $15 per hour and counted as 4 hours, average 20 days of working hours. English course materials cost are calculated as average USD $20-30 per person.

Consultancy on to companies and Consultancy on New Product Development is charged similarly. Consultancy for company is based on cases XX USD – Since companies’ purchasing power is greater we start charging with XXUSD, later the company know how increase and we will be able to charge more.

New product development case, depending on a situation and return of a product, the ET Consulting Company may negotiate for certain amount of its income, planned to be around 5-10%. If the company is financially not that strong, product may not be successfully launched company may revise and may charge fixed amount.