Entrepreneurial project Individual Project (стр. 2 из 4)
To sum up, the project has two categories of target customers:
1. local small and medium-sized companies, processing certain types of polymers, produced on the Republic of Tatarstan territory, including the newly-established companies;
2. foreign medium-sized and big companies, processing certain types of polymers, produced on the Republic of Tatarstan territory.
3.2. Competitors and Competitive Advantages
The target customers have two-sided choice, deciding on their possible location.
First, they may locate within industrial premises of Kazan city. According to the market research[2], by the end of 2007 Kazan real estate market comprises office, trade and industrial stocks in the proportions, presented at Graph 2:
Graph 2
Kazan industrial stock comprises over 57% of all real estate premises available for lease, but only third part out of these 1 200 thousand sq.m is professionally developed (due to the above described reasons). But the site state prevents the immediate lease of all premises available. Hence, there exist opportunity for growth.
But the target customers may also choose some other industrial park out of those developing in Russia (see Fig 1).
Fig 1
Main competitors group in Moscow and St.Petersburg regions. Tatarstan is beneficially located in Russia, on the boundary of European and Asian parts of the country, being the logistics juncture of those. So, the location of our industrial park in Kazan forms one of its competitive advantages, especially taking into account the chosen industrial park profile connected with the republican economy peculiarities.
The location of “Himgrad” Industrial Park in Tatarstan – one of the leading Russian regions in chemicals producing and processing, automatically makes it close to Russian largest producers of polymers: Kazanorgsintez plant; Nizhnekamskneftekhim plant; Kazan Synthetic Rubber plant; Karpov Chemical plant; Nizhnekamsk Oil Processing plant; Nizhnekamskshina, etc. (see Fig 2)
Fig 2
Such a location forms an additional advantage for companies occupied in the target industries, since they tend to locate their production facilities close to processed raw materials producers, and the main raw materials processed by chemical and petrochemical companies comprise certain types of polymers (polyethylene, polypropylene, polystyrene, polycarbonate and some others).
Furthermore, the site logistics is perfect (see Fig 3). The industrial park is situated in the north-west part of the city, within close proximity to Kazan major traffic routes (highways and railway station (incl. railway lines within site territory). The site has convenient access approaches. The Kazan international airport is just 30 minutes away by car.
Fig 3
The last circumstance is of benefit in comparison with both local industrial property complexes and with other industrial parks in Russia (since not every industrial park or building has such a convenient location inside the industrial part of the city).
3.3. Target Market Segment Strategy
According to the real estate consultants data, residents usually chose the premises of any type to lease (office, industrial or warehouses) according to the “classical” model of consumer choice process. The real estate choice presupposes high customer involvement and rational evaluation of all the factors (“thinking” rather than “feeling”). Little emotionality is possible while choosing the premises for the company’s headquarters or back offices, since these belong to the keystones of its future success and profit. The factor, intensifying the rationalist approach of the customer under analyzed circumstances to property choice, is the mentioned novelty of the product (service). A new buying situation (see Graph 3) here presupposes the customer’s substantial search for the information on the project by means of any available sources.
Graph 3
In order to be a success, a developer ought to create an extremely attractive value proposition for the target customer, which should be based on the objective evidence (the site obvious advantages in comparison to other possible locations). Some of the “Himgrad” Industrial Park surface benefits include lower than the city average rents level, tax remissions, low utilities prices, etc.
Another peculiar feature of chemical and petrochemical industries is that during the company’s location decision making process a huge number of technical details should be taken into consideration.
The situation is easier if we deal with small companies, since the Decision Making Unit there may be limited to one person or few ones. In case of medium-sized and large companies, the Decision Making Unit consists of different people, or even companies’ departments, performing different roles in decision making process.
Thus, the location or relocation decision is generally initiated by the company’s top management (which is mostly influenced by public relations media and is driven by brand and prestige); the deciders are commonly engineers and other technical specialists (which are driven by reason); the decision may be influenced by the company marketing or supplying department, which may assess the proximity to the company’s partners for the most, etc.
Besides, there exist two time gaps in decision making process:
1. a gap between the point when the company realizes the requirement for location, relocation or further expansion and the point when the location decision is made by the company;
2. a gap between the point when the location decision is made by the company and the point when the location itself takes place.
The second gap is conditioned by the technical complexity of the industries’ production facilities. As for the first one, the developer’s task is to prevent the customer’s withdrawal from the site, having taken decision in favour of some other location. And this becomes a challenging task, since the time gap may cover several months or even years sometimes. So, to make a bargain, the project developer ought to be able to answer the all departments’ specialists’ questions and satisfy all their needs and requirements.
Moreover, the decision making process here takes much more time, and becomes a step-by-step procedure, when the developer has to conduct a successive series of negotiations with different specialist.
When speaking about the second group of our target customers – foreign and international companies, we should bear in mind the necessity of keeping the services level to the international standards. Compared to local companies, having no choice of industrial parks in Russia, this group of customers is free to choose from other global locations – that is European, Chinese and American industrial parks and technoparks, having industrial premises. The competition on the global market is of a comparatively higher order than at the local one.
Besides, there is another intangible benefit – the brand name, the company reputation and some other points of prestige. E.g. the global company presence at the site to a great extent increases its attractiveness for other potential residents. The authority, prestige and influence of the first site resident set the project general tone. At present moment the negotiations with some leading world polymers processors are held and actually their entrance to the site is one of our main aims at the moment, able to increase the further promotional efforts.
The neglected state of the territory presupposes our obvious inability to attract the residents at the moment of the project’s initiation. Hence, at the initial stages of the project development the site could not be developed according to “build-to-suit” concept, when the developer holds preliminary negotiations with potential residents, signs binding lease agreements with them and develops the land plots or buildings according to these very residents’ requirements; it could rather be “spec building”, when no binding lease agreements are signed, and the developer improves the site state at his own expense.
3.4. Market Trends and Growth
To formulate a prospective business plan, we should assess the target market development trends. Russian economy today experiences rapid growth, the number of investment projects grows from years to year, and the corresponding investment amount increases as well. Thus, investment growth in 2007 exceeds 17.4% comparing to the previous year.
The “Himgrad” Industrial Park prospects depends on both real estate and petrochemical markets development trends.
Russia's commercial real estate sector is currently the fastest growing in the world and will retain the direction to further extensive and intensive growth. The first one is connected with the increase in premises total square, the forecast of which is presented at Graph 4. The intensive growth comprises the premises quality improvement and their compliance with internationally excepted standards.
Graph 4
As for the chemical industry, in which work our target customers, it also experiences considerable growth at present time. So, the investment in chemical products is 2.6% of total investment in Russia in 2007.
The annual production volume in Russian chemical industry in 2007 amounts to $34.7 bln. (growth rate is 10% compared to year 2006). The corresponding number for the Republic of Tatarstan chemical industry is $3,8 bln. with growth rate at 16% level. According to the analysts’ estimates[3], the specified trend will extend for the following five-seven years. So, the growth in chemical industry will provide the growth of our target customers, occupied in chemical business.
4.0. The Proposition
The project developer aims at creating new for the region establishment – an institution, providing a juncture of production and service facilities, which intensify the site residents development.
The purpose is to be achieved by means of reconceptualization, reconstruction and redeveloping to meet the state-of-the-art economic conditions requirements.
A suggested positioning statement may be formulated as follows: “Himgrad” Industrial Park is one of the best possible locations for both small and medium-sized companies, providing a comprehensive services range along the entire customer value chain at comparatively low prices”.
So, the residents of the industrial park will get a complex product consisting of:
1. premises for lease; and
2. a range of services provided to residents as an essential and integral part of it.
Generally, the range of services provided to industrial parks residents is much wider than a usual scope of services for other types of leased property. If we speak about the comprehensive range of services, the concept of the “Himgrad” Industrial Park is focused on providing core (directly connected with the residents’ manufacturing process, such as property management and complex energy supply) and additional services along the whole customer supply chain (see Fig 4).
Our mission is to provide companies in the industrial park with the infrastructure and customer-centric industrial services they need to focus fully on their core business. This circumstance enables to boost the competitiveness of both the industrial park and the tenant companies. We aim at creating favourable conditions (including e.g. tax remissions) for regional petrochemical industry development, by means of combining within one territory research and development, production, marketing & sales and logistics facilities providing a comprehensive range of services along the whole value chain for site residents
Fig 4
The complete technological infrastructure of the industrial park will serve the needs of the resident companies. The technological infrastructure (see Fig 5) comprises refrigerating stations, freight terminal, railway network, capacity park, electric power substation, machining process centre, gas-distributing post, pilot plants park, high-end technology park, corporate university, water treatment station, sewage disposal plants, compressor stations, fire station, aid post, heat and steam distribution point etc.
Fig 5
Our company aims at creating a unique business environment, assisting the residents in their efficient development. The effect is achieved via providing a number of intangible benefits to the residents. That is the compliance of our strategy to residents’ development strategies, aiming at creating possible synergy from residents’ interaction (the chance of finding future business partners and contractors increases, when, like in our industrial park, there exist both developing and mature companies), and employing authoritative resource, which becomes possible due to our active and close interaction with the Republic of Tatarstan government.
5.0. The Business Model
Our business-model is based on a global trend of separating infrastructure from chemical companies core business. Infrastructure is no more chemical industry core business, neither a supplementary part of it. The difference between the very nature of these two spheres of activity is so immense, that they hardly can go together (see Table 1).
Table 1
The infrastructure providing business is less risky, than that in chemistry and petrochemistry producing. The profits are less than those in chemical industry (see Graph 5).
Graph 5
Moreover, since the business is a specific one, it needs some special production facilities, assigned for chemistry. These are usually expensive, and not every small company can afford these. That’s why industrial parks are a good decision for small and medium-sized companies, since in industrial parks they may concentrate around one infrastructure providing company and keep in mind only their core business, as presented at Fig 6.
Fig 6
6.0. Sales & Marketing
The objective of our communication is in attracting potential residents for location within the site territory, which provide us with at least two constant sources of profit: rent payments and payments for services provided.
If we consider the local companies (whatever their size is), both advertising and public relations work efficiently for promotion. Another characteristic feature here is that we intend to spend less money on advertising, paying more attention to public relations, which comprise non-paid communication effort, such as press releases, speeches at industry seminars, appearances by firm executives on radio and TV, etc. These media are extremely influential with customers, and in case of proper organization may save a lot of money, resulting in the same effect for the site development.