!""#$%&'#"()#*(+,'-.'"/('".

,0&*12(
+#-&'"/(+-#34(
!"#$%&$%"%'$()*&+,'(*"%((+-&&.$#'"*#/+&01"+

This report describes our strategy to bring an innovative mortar-less system to
the construction industry.






Xavier Bourret Sicotte, Canupsorn Chairatna, Hang Dong, Nader Kaheil,
Zhengda Li, Hamza Shaikh
17/12/2010


i

!"#$%&'(&)'*+%*+,&
!"#$%&'()$ !
*"#$')+$%,-./('$ !
*"!$%,-./('$.+0(,&%'&-1$ !
*"*$&.+1'&2&(3'&-1$-2$')+$3%%4&(3'&-1$ *
5"#$')+$63,7+'$ 5
5"!$.&8$.-6+0'&($63,7+'$ 5
5"*$&1'+,13'&-134$63,7+'$ 9
5"5$63,7+'$&10&:)'0$31.$;+)3<&-/,$ 9
9"#$(-6%+'&'&-1$ =
9"!$(-6%+'&'-,0$ =
="#$0',3'+:8$ >
="!$;/0&1+00$6-.+4$31.$%,-./('$24-?$ >
="*$<34/+$()3&1$313480&0$ @
="5$'++(+$6-.+4$31.$%-0&'&-1&1:$ A
="9$313480&0$-2$,+43'&-10)&%$?&')$%3,'1+,$(-6%31&+0$ B
="=$%,-'+('&-1$0',3'+:8$ !*
=">$63,7+'&1:$31.$%,-6-'&-1$ !5
="@$0',3'+:8$(-1(4/0&-1$31.$2-(/0$%-&1'0$ !9
>"#$6313:+6+1'$31.$'+36$ !=
@"#$2&131(&340$ !>
@"!$%,-./('$%,&(&1:$ !>
@"*$(30)$24-?0$31.$(-0'0$ !>
@"5$&1<+0'6+1'$31.$'-'34$,+<+1/+0$ !@
@"9$0-/,(+0$-2$2&131(&1:$31.$+C&'$0',3'+:8$ !A
A"#$'&6+4&1+$ !B









1

-./&01+23&
Bolting Block is a revolutionary system that will be valuable to the construction
industry as it is simpler, cheaper and stronger than conventional concrete blocks.
Bolting Block consists of 3 parts: A block, a bolt and a bar and the block is
sandwiched between two metal bars bolted together. As no masonry is involved, a
wall can be constructed within a day's time and requires no experience or skill in
construction. The initial target market will be DIY construction and landscaping e.g.
constructing temporary garages or storage spaces, but we forecast a widespread
usage in a range of applications ranging from professional contractors to aid and
disaster relief.
4./&!3%&56'782+&&&&&&&
4.-&06'782+&7%,2615+1'*&
Bolting Block system consists of three major parts: a concrete block, metals bars and
bolts. The concrete blocks are 400mm x 200mm x 200mm in size, the bars are
200mm in length, 20mm in width and 10mm in thickness, and the bolt is 210mm long
with a diameter of 8 mm. The blocks have recess pocket which allows the system to
be connected mechanically in the following way:
- A block is sandwitched between two metal bars
- The bars are bolted together through the block
- Another block and bar are layed on top, and bolted through the second block
to the bar bellow.
This system provides post tensioning, which gives strength to the structure in both
vertical and lateral direction hence is stronger than conventional masonry.
Constructing a wall using Bolting Block does not require mortar, which means it
saves time, requires little skills, is environmentally friendly and can be used in cold
countries. The construction process can be speeded up even further by using double
or triple bar which expands 2 or 3 blocks respectively. On top of that, all parts are
reusable and can be taken apart easily.







2DEFGH$!$IJKLI$MJH$NKOIMGFNMDKO$PHMJKQI"$
2

4.4&97%*+1(12"+1'*&'(&+3%&"55$12"+1'*&
To better understand the implications of our new technology and what customers,
markets and situations would best benefit from it, research initially focused on a
small scale, personalised analysis. This involved interviewing professionals and
entrepreneurs, industry experts and academics, and construction workers to get a
better sense of how our product could be used, and where. The summary of this
qualitative market research is given in table 1:
'RSTH$!$IJKLI$IFPPRGU$KV$R$WFRTDMRMDXH$GHIHRGNJ$
Professionals &
Entrepreneurs
Industry Experts &
Academics
Construction Workers

Not technically suitable

Unwilling to change
existing process and
operations

Sceptical of long term
resistance

Enthusiastic about
possible applications in
developing countries with
shortage of skills

Variety of applications in
military, governmental,
temporary, disaster aid,
seismic environments


Attracted by practical,
user-friendly features.

Were interested in using it
themselves to built their
own house extension.

Would mention it to friends
with little masonry
experience as an
alternative to using
contractor

It appears from the interviews that professionals and entrepreneurs are sceptical
about the product and need more proof before considering using it. Academics are
attracted to the socio-economical impacts of the technology and believe it has
potential. Lastly, several construction workers raised the idea of using Bolting Blocks
in the Do It Yourself (DIY) industry as its simplicity made it a good alternative for
people with little masonry skills.
Further analysis confirmed that the DIY market is particularly attractive to serve as an
initial customer base because Bolting Blocks offers a cheap, simple and attractive
solution to the problems associated with building a house extension, garage, pool
house or garden walls. Indeed, many people are reluctant to pursue such projects
themselves as it requires making mortar and cement, which is dirty, time consuming
and difficult for those with little experience.
The second stage of the market analysis investigates the size, segmentation and
other relevant insights on the DIY and house extension market in the UK.



S

:./&!3%&;"6<%+&
:.-&=9>&7';%,+12&;"6<%+&
Following a boom of the DY market in the late 90's and early 2000's there has been
a gradual fall since 2004. However, as incomes and buying power have decreased
due to the recent economic crisis, the next few years should be a good time to
encourage more DIY activity with the introduction of innovative products.
According to a recent Mintel UK market report, 6% of households consider building a
housing extension and 1% have installed one over the past 12 months. Moreover,
32% of people would consider DIY solutions for bricklaying and masonry. Combined,
these figures yield a market size estimation of 80 000 households/year
1
willing to buy
a DIY solution for their masonry/housing/extension work in the UK. This is most likely
an underestimation of the total DIY market available for Bolting Blocks as it does not
consider households that would decide to build an extension based on the
attractiveness of our product.
Another particularly attractive
market is that of gardening,
landscaping, neighbour separation
and other kinds outdoor walls. The
estimation of the size of this
market is based on the number of
households with the following
specifications:
x More than 1 person
2

x Owned or mortgaged
3
and
not social housing and
x With a garden
This leads to an approximate
estimation of 9m households
potentially interested in the
outdoor gardening and
landscaping applications of Bolting
Blocks in the UK.

1
Detailed calculation: number of households x % which have bought extension x %
who would consider a DIY solution for extension
24.9m x 1% x 32% = 79680 households
2
ueneial Bousing Suivey, 0ffice foi national statistics 2uu7
S
Suivey of English housing: 2uu8-2uu9
http:www.communities.gov.ukpublicationscoipoiatestatisticsehs2uu8u9househ
oluiepoit
2DEFGH$*$IJKLI$.&8$QKPHIMDN$PRGYHM
4

:.4&9*+%6*"+1'*"$&?"6<%+&
Most northern, developed countries have a potential market similar to that in the UK
because the problems and requirements of users will be similar in those countries.
Although they differ in size, we estimate similar market characteristics and
attractiveness for Scandinavia, North America, and Northern Eastern Europe, with a
particular interest in Sweden, Norway and Finland, where people generally have little
masonry experience.

:.:&?"6<%+&1*,1@3+,&"*7&#%3"A1'86&
In addition to the actual size and segmentation of the DIY market, it is useful to gain
an understanding of the behaviour and mind frame of consumers so as to better
promote and sell our product.
A key question to ask is what motivates people in undertaking a DIY project
4











This study highlights the role of DIY as a cheaper alternative as the main source of
motivation. Gaining a satisfaction from the learning process and implementation also
plays a significant role and should be considered during our marketing campaign.
Other insights found from the research are that 30% of adults lack the confidence to
do any DIY
5
while browsing stores for ideas is one of the most popular sources of
inspiration for DIY consumers. The young (under 25s) in particular, rate superstores
as idea centres. As a result, stores and retailers should aim at building people's
confidence to tackle a wider range of DIY tasks and present them with new,
innovative opportunities.

4
FGI research August 25, 2009: http://www.fgiresearch.com/trendtruth/do-it-yourself-
men-and-women-motivated-by-different-factors.html
5
MINTEL DIY report, June 2010
Less expensive
S8%
I uo bettei job
S%
Stiess ielief
4%
Enjoy
leaining
1S%
uives
satisfaction
2u%
?JU$QK$UKF$QK$.&8$ZGK[HNMI$\
2DEFGH$5$IJKLI$MJH$GHIFTM$VGKP$MJH$WFHIMDKOORDGH
S

B./&)';5%+1+1'*&
B.-&)';5%+1+'6,&
Since Bolting Blocks is an innovative product, its main competitor will be the pre-
existing technology of mortar and cement construction. However, there also exists 4
different mortar-less building systems in the market and all are based in North
America. Of these, Haener Block and Sparlock Systems are our most significant
competitors as their products are already used and established.
'RSTH$*$IJKLI$ZKIIDSTH$MJGHRMI$VGKP$H]DIMDOE$NKPZHMDMKGI$
System Year established Threats
Haener Block 2007 Well established as a low-cost DIY
product in the US.
Wholesale price (20k+ blocks) is very
low at $1.75 per block.
Sparlock System 1999 Reputation as an eco-friendly product.
Has licensees in 20 countries.
Well established in the North American
residential and industrial 'fire wall'
market.

Our advantage over these systems lies in the design of our product. Bolting Blocks is
the only mortal less system to make use of unitized post-tensioning, which is the
concept of bolting the blocks together. This makes our product stronger, more
flexible and easier to use.











6

C./&D+6"+%@E&
C.-&F8,1*%,,&;'7%$&"*7&56'782+&($'G&
Bolting Block will initially choose to subcontract the manufacturing of all materials,
components and packaging required. The products will then be sold through existing
retailers that are already well implemented in the market. We aim at transporting the
blocks and metal directly from the manufacturers to the retail stores so as to
minimize the necessary storage and intermediaries.










This approach was chosen because Bolting Block Company does not have the
experience, knowledge and scale necessary to produce commodities such as
concrete blocks and metal bars and bolts efficiently. In fact, we believe the cost per
unit of our product is lower when subcontracting the manufacturing because such
companies operate on very large scale and small profit margins. Also, the
investments required to purchase machinery and produce the blocks would greatly
increase the time before commercialization and make raison capital more difficult.
Similarly, it is more viable to sell bolting blocks through pre-existing retail channels
as these have good access to consumers, sales force, infrastructure and experience.
We aim at accessing a large portion of available consumers and sell large volumes
at reasonably low price. From the market research conclusions and considerations of
the nature of our product, we believe consumers are unlikely to travel, research, or
pay a high price for Bolting Blocks, which explains the necessity of having multiple
selling sites.
Finally, owning as few transport facilities, infrastructure, machinery and retail sites as
possible means that the initial investment required for Bolting Block to operate is
minimised. Moreover, the low operating cost of this model guarantees a rapid
payback on investment and low risk. Revenues can rapidly contribute to profits
despite the lower margins.
2DEFGH$9$IJKLI$MJH$ZGKQFNM$VTKL$ROQ$ZKIDMDKO$KV$;KTMDOE$;TKNY$DO$MJH$ZGKNHII
7

Reseaich
Innovative iuea, know how
Bevelopment
Patents, Tiauemaik, Ceitifications
Contiacts, Agieements
Piouuction
Nanufactuiing capability
Size, scale, impact
Naiketing
Cieativity, buuget, time,
Bistiibution
Sales seivice, Customei ielationship
Bianu image
On the other hand, there are risks and disadvantages that need to be taken into
consideration. For example, we are bounded to find suppliers and retailers willing to
cooperate with us. This may reduce our profit margin and limit our growth. This
approach will therefore require extension work to find agreements and sign contracts
pleasing all parties and protecting us from defaults and major risks.
Another issue arises from the lack of storage space and buffer in case of rapid
change of inventory volumes. As stocks are small to lower the exposure and risk,
retailers may run out of blocks or be left with unsold ones, which would cost us and
harm our relationship with the retail company. The logistics and planning which
including quality checking, sales prediction, packaging etc must be efficient and well
coordinated to avoid these problems.

C.4&H"$8%&23"1*&"*"$E,1,&
Bolting Block will therefore control several parts of the value chain; Research,
Development and Marketing. Our complementary assets are
x Innovative technology,
patents and design
x Certifications and
construction permits
x Marketing creativity
However, we have limited control
over the production and
distribution aspects of the chain,
which is the main weakness of our
business model. In order to justify
our strategic choices it is important
to understand which of these
complementary assets we do not
control are most important for
creating value.

Manufacturing
Bolting Blocks is a simple product to manufacture in terms of materials used,
fabrication and complexity of the technology. There are a large number of companies
with the expertise and facilities necessary for the manufacturing of Bolting Blocks as
long as they are given the required specifications. As a result, not controlling
manufacturing and scale assets is not a threat to our model as these are not tightly
held by any single entity.


2DEFGH$=$IJKLI$MJH$XRTFH$NJRDO$RORTUIDI$KV$;KTMDOE$;TKNY
8

Distribution
On the other hand, distribution and retailing of Bolting Blocks is of great importance
in the value chain, as retailers will play a key role in the packaging, logistics and
selling of our products. In order to change habits and pre-conceptions of our product,
we need the cooperation of retail sales agents. These are generally considered to be
reliable and 'expert' sources of advice by DY customers and their recommendation
can have a strong impact on our sales. The short-term success of Bolting Blocks will
therefore be closely linked to the willingness of retailers to provide the necessary
exposure, positive reviews and advice and support services to both our product and
our company. In the long term, we may aim at moving away from this reliance on
retailers so as to gain more control over these vital complementary assets.

C.:&!%%2%&;'7%$&"*7&5',1+1'*1*@&
As a result, our most valuable complementary assets are patents and certifications in
the UK that protect us from competition and guarantee the high appropriability or our
product. Distribution and retail also play a key role and substantial efforts will need to
go in securing control or cooperation with companies possessing such assets. Such
cooperation would enable Bolting Blocks to move further into the highly profitable
region of the Teece model and would provide us with opportunities to create more
value.















2DEFGH$>$IJKLI$'HHNH$PKQHT
9

C.B&I*"$E,1,&'(&6%$"+1'*,315&G1+3&5"6+*%6&2';5"*1%,&&
Due to the importance of retail and manufacturing companies and contracts in the
success of our business model, the following section will describe the balance of
force, the pros and cons of different possible contracts and the criteria on which we
will base our choices of companies to work with.

Our position and "weight"
It is valuable to keep in mind the balance of forces when dealing with manufacturers
and retailers and signing contracts with them. This will influence the terms of our
agreements with them and can have a strong impact on the profitability and success
of our business.
Generally, we can assume that these companies feel they are in a dominant position
because they are already well implemented in their businesses and do not need our
product to continue to be profitable. Moreover, we imperatively need to work with
them to operate and their support and cooperation would have a strong positive
impact on our profitability. The added complexity and costs caused by the different
specifications, volumes, delivery and logistics requirements of Bolting Blocks could
also weight in favour of subcontractor.
Nevertheless, there are a number of arguments that we can use to strengthen our
position during negotiations. There are several competing firms in the market for both
manufacturing and retail and any of these will be eager to gain new clients over its
peers. Our product is innovative and will create a new market: attracting customers
and causing a switch from the old technology to ours. Companies working with us will
benefit from this and will avoid losing customers to their competitors. Moreover, the
ownership of patents and certifications strengthens our position in the value chain
and there is limited risk of a similar product being sold elsewhere. Finally, the
companies we chose to work with will benefit from our strong promotion and
marketing, as we may be willing to include their brand name in our campaign.

Analysis of contracts and relationships with different parties
Although Bolting Blocks has pre-agreements with a number of parties, we aim at
obtaining the most favourable contracts as possible and need to find the best
compromise between the available alternatives. The next table summarises the pros
and cons of the most important strategies:




1u

'RSTH$5$IJKLI$RORTUIDI$KV$NKOMGRNMI$ROQ$MJH$OFPSHG$KV$ZRGMDHI$DOXKTXH$
Advantages Disadvantages
Single
supplier/
retailer
Lower prices because of larger
volumes and discounts. This allows
greater profit margin for Bolting Block.

Operational time and cost are
minimized, as there is only one party
to deal with.

Easy to manage and keep track of the
goods.

Opportunity of developing exclusivity
agreements, shared goals and greater
sinergy

Dependency on a single party puts us at
great risk if it defaults or goes bankrupt, as
we have no alternatives.

Single party may be unwilling to change
conditions and hold us captive. This restricts
our flexibility to make use of new
opportunities. Eg: new technology at
competing supplier halves costs.

Need to maintain a good relationship with the
supplier to ensure success.

Distribution of goods may cause problem if
the supplier has only one manufacturing site.
This means the goods have to travel great
distance before arriving at the retailer hence
greater cost.

Multiple
suppliers/
retailers
Reduce the risk of shortage of supply.

Distribution time can be minimized if
the suppliers are spread out. i.e. one
in the north one in the south.

Short-term contact can be made to
ensure flexibility and that the contract
benefits us the most. This way we can
sign new contract with other suppliers
who are willing to supply at lower
price.

Higher cost relative to single supplier due to
the diseconomies of scale.

Operation time and cost are increased.

Distribution process and strategy is more
problematic.

Greater variation of the products. This could
lead to quality and assembly problems: i.e.
the blocks do not fit together properly.
Long
term
Benefit from lower price.

Greater protection against volatility in
raw material cost.

Strategic planning can be made years
in advance since the cost can be fixed.


Supplier might decide to change its strategic
behaviour in the long run and this could lead
to negative impact.

Sticking with the long term contract may
damage the competitiveness if other
suppliers can offer a better deal. i.e. due to
theirs economies of scale or technological
advanced in production method.
Short
term
Allow greater elasticity of supply.

Provide the ability to obtain the best
contract at the time.
Short-term contracts are signed at higher
price.

Negotiation for new contracts requires time
and cost.

Failing to obtain the contract in time may
results in the shortage of supply.
11

Criteria for choice of companies
We will base the choice of suppliers and retailers to work with on a number of criteria
including:
x Price and terms of agreements
x Size and capacity: number of sites and their localisation
x Supply time and delay before output
x Presence on international market, opportunity for future collaboration
x Other; infrastructure, transport,
Generally, we hope to work with large companies over local ones as we believe
these have a number of advantages such as:
x Available excess capacity that can be used to increase production in case the
demand of Bolting Block System increases in the future.
x Transport and packaging infrastructure and facilities (trucks, drivers, logistics)
x Numerous site locations that can minimise transportation distance and costs
x Greater economies of scale and impact and presence on the market, both
domestic and international
x Better known brand image, greater experience and expertise from which we
can draw upon.
Preliminary list of suppliers and retailers in the UK
The following table shows a selection of potential suppliers and retailers for our
product in the UK.
'RSTH$9$IJKLI$IHTHNMDKO$KV$ZKMHOMDRT$IFZZTDHGI$
Block Bolt Bar
Hanson UK TR Fastenings ADS Metal Service
Tarmac Smithbullough Merseyside Metals
Masterblock IEbolt Brindley Metals
H+H UK William Johnston West Yorkshire Steel
Cemex STF Fasteners Kiveton Park Steel

'RSTH$=$IJKLI$IHTHNMDKO$KV$ZKMHOMDRT$GHMRDTHGI$
XXX=shortlisted for preliminary negotiations

DIY No. stores Builders Merchant No. stores
B&Q 321 Travis Perkins 600
Wickes 190 Jewson 500+
Homebase 300 Build Base 138
Focus 181 Build Center 200+
12

We have selected a short list of one company in each category that corresponded
the most to our criteria to begin preliminary negotiations. Hanson UK, for example, is
chosen because it is the leading supplier of building materials in the UK. It has over
350 manufacturing sites over the country and is capable of delivering the goods with
short lead time. Moreover, Hanson UK is part of Heidelberg Cement Group which
operates in 40 countries worldwide and may provide future business opportunity for
Bolting Block as it can facilitate the implementation of our business model in other
countries.


C.C&06'+%2+1'*&,+6"+%@E&
The following table summarises the various threats and responses that are part of
our protection strategy

'RSTH$>$IJKLI$MJGHRMI$ROQ$GHIZKOIHI$RI$ZRGM$KV$ZGKMHNMDKO$IMGRMHEU$
Threat Response
UK block manufacturers or retailers could
create a similar product and use their
scale and assets to crush our start up
Extend our patent portfolio to guarantee
protection.

Commercialise the product and gain
brand image and customer appreciation
Companies selling normal concrete
blocks may try to drive us out of business
by significantly reducing their price,
becoming unprofitable for a short period
but relying on their size and other
revenues

We must convince customers of the
benefits of our system over others.

Market our product and educate
customers of the added value of Bolting
Block. Create demand for something that
does not exist yet.
A US based mortal-less company
establishes itself in UK.

Establishing long-term contracts with
retailers may delay the arrival of US
based competitors.

Our system will have a foothold and our
advantages will be user's experience
with our system, reputation, popularity
and product design. (First mover
advantage)

Generally, we will rely on patents, first mover effect and agreements with retails and
manufacturers to protect us from competition

1S

C.J&?"6<%+1*@&"*7&56';'+1'*&&
Vision
We believe the marketing and promotion of Bolting Blocks will be a key driver of
sales because it addresses several of the main barriers to entry. These are:
x The reluctance of customers to switch to a new, unknown technology.
x The lack of public knowledge and recognition of our product; no brand name
x The misunderstandings on what our product can be used for.
x The lack of experience of consumers in masonry and construction
The marketing strategy will therefore aim at demystifying, educating and convincing
potential consumers. It will take place in two different environments, the DIY and the
professional market, but a special focus will be given to DIY as we believe this
segment contains the majority of Bolting Blocks initial lead users. The marketing plan
is devised in two; standard advertising and Innovative and Viral marketing.
Standard Advertising
This consists of television, Internet and magazine advertisements aiming at
increasing customer awareness of our product. It is easy to design and implement
and requires low involvement and operating costs. The drawbacks of these methods
are the low effectiveness and the high costs of buying advertisement space in media.
Innovative marketing and advertising
This will be the main focus of our campain and can be divided into three different
types
On site advertisement:
Consists of stands showing Bolting Blocks and their usage at retail stores. This can
be done with through videos and screens, or by showing a wall being built and
deconstructed by an employee. The aim is to show, in an interactive and interesting
way, how simple and intuitive Bolting Blocks are. Such stand can attract potential
consumers through a number of factors; the price saving, the simplicity of the
process, the reusability, the fun factor, and it is important that the video or "live
performance emphasize all these points so as to gain maximum effectiveness.

Marketing through reviews, events and awards
To rapidly gain recognition, a team will be focusing on developing Bolting Blocks
brand image by:
- Sponsoring events, fairs and TV shows
- Promoting consumer and editorial reviews on the product
- Registering and competing for awards: e.g. NY times innovation award
- Promoting word of mouth advertisement in the construction industry
14

Online, media and viral marketing
The final aspect of the campaign will involve innovative and web based forms of
marketing. This will first involve developing a well designed, attractive website
providing all necessary information and serving as the main tool for educating and
convincing consumers. Other methods could include online viral videos and
interactive competitions with users: e.g. Post a video of a creative use of Bolting
Blocks and win a prize!

C.K&D+6"+%@E&2'*2$8,1'*&"*7&('28,&5'1*+,&
It can be argued that Bolting Blocks should lease its technology, as its current
business model does not control the production and selling aspects of the value
chain. However, we believe our team is more motivated, creative and efficient in
developing patents, obtaining certifications and marketing the product. This model
allows us to keep control over the vital aspects of the value creation process in which
we have a competitive advantage while allowing manufacturing and retail companies
to apply their own complementary assets to our benefit. This results in a highly
efficient and risk free business as long as it takes place within a cooperative
environment.
With this in mind, we can devise the general strategy for Bolting Blocks Company
and make sure we concentrate on what creates the most value while keeping tight
control on the risks and disadvantages of our model. Our focus points are:
x Extending our patents, certifications and design portfolio
x Negotiating strong, advantageous and risk free contracts
x Designing an impactful marketing campaign to raise awareness and
understanding of our product, change preconceptions and support sales
x Researching and understanding the market needs and developing new
products and applications of Bolting Blocks: e.g. defence, humanitarian
x Slick and efficient operations based on the just in time model. This will require
good predictions of supply and demand and a rapid adaptation to changes
x Developing new markets in Scandinavia and North America





1S

J./&?"*"@%;%*+&"*7&!%";&
Bolding Block will initially be lead and owned by its three fownders, which are also
owners of the patents. Together, the founders have experience and expertise as a
civil engineer, an entrepreneur in the construction industry and a lawyer. Due to the
limited resources in the early stages, the company will aim at hiring 3- 5 full time
employees initially, and outsource in the most cost effective manner.
The company will adopt a flat matrix structure to emphasise knowledge sharing, and
flexibility in the decision making process. Although each vertical section can function
independently, important decisions and strategies will be made as a non-hierarchal
group.











$
2DEFGH$@$IJKLI$R$VTRM$PRMGD]$IMGFNMFGH$
Legal, Operations and Management/finance will be lead one of each founder, but the
lack of expertise in Marketing, IT and support coordination requires hiring new team
members. A particular attention will be given to to finding a dynamic and innovative
leader for the marketing division of the company.





Management, Finance
Accounting
IT services
Support functions,
Coordination
Marketing
Advertisement, website,
sponsorships
Operations
Supply, demand,
logistics, customers' serv.
Legal
Patents, Certifications,
Contracts

16

K./&L1*"*21"$,&
K.-&06'782+&56121*@&
The final price of the product at retail stores is estimated to be 5 per unit, which is
above the price of basic concrete blocks and of competing block systems. The
reason the price is higher is because of the singinificant added value brought by
Bolting Blocks in terms of time gain, simplicity, satisfaction and overal costs.
Comparative analysis shows that the cost of building a 4m
2
wall using
- A contractor is approximately = 1500,
- Buying own material and hiring labor = 450
- Bolting Blocks at 5 / unit = 200
We our confident that our marketing compain will be able to convince potential
consumers of the benefit of using our system and believe 5 is an optimal price. The
number 5 is easy to remember and use in mental calculations and this price allows
us to remain profitable even in the case of poor sales and weak contractual
agreements with manufacturers and retailers.

K.4&)",3&($'G,&"*7&2',+,&
Initial estimations of cash flows related to producing, distributing and selling a unit of
our product are shown in table 7 for three different scenarios:
'RSTH$@$IJKLI$DODMDRT$HIMDPRMDKO$KV$NRIJ$VTKLI$
() / unit block Optimistic Base Pessimistic
Manufacturing cost - 1 - 1.75 - 2
Retailing cost - 1 - 1.75 - 2
Operating cost - 0.5 - 0.5 - 0.5
Price sold + 5 + 5 + 5
Profit + 2.5 + 1 + 0.5
Profit Margin (%) 50% 20% 10%

The profitability of our model will be most sensitive to the pricing agreements with
manufacturing and retailing parties. Generally, the manufacturing costs will decrease
with volumes, but the share given to retailers will likely remain the same.



17

K.:&9*A%,+;%*+&"*7&+'+"$&6%A%*8%,&
The company's three founder have invested a total of 60 000 for the initial
development, patents and building certifications of Bolding Blocks in the UK.
Additional funding is required to pursue the strategic targets described previously, in
particular extending the portfolio and commercialising the product.
Due to the nature of our business model and the importance of changing consumer's
expectations and habbits for the success of our product, the major part of raised
financing should be used in marketing and advertisement. Assuming patents and
certifications are obtained and that we sign good agreements with the companies, we
believe the sales in the first 2 years will be strongly related to the amount spent on
marketing. As a result, we predict two different scenarios for our financing strategy
within a time frame of 5 years














2DEFGH$A$,3'G,&+G'&71((%6%*+&,2%*"61',&('6&+3%&(1*"*21*@&,+6"+%@E$
The first scenario (Blue) requires a large initial investment of 500 000 of which 100k
will be used for set up and operations and 400k for marketing. This will strongly
increase sales and we estimate the breakeven point to happen within 1.5 years,
(1 year after commercialisation). Considering only the DIY house extension market,
we aim at capturing 10% of the market in the first year, and selling an average of 100
blocks / customer, resulting in approx 4M revenue and 800 000 profits.

18


The second scenario (red) involves a much smaller investment of 100 000 which
will be used entirely for set up and operations. The corresponding sales will be
slower but the risk and exposure also. A second round of investment at the end of
the first year can then be used for better marketing, which will lead to an increase in
sales. Following this approach will result in slower growth but also decreases risk
and helps securing investment.


K.B&D'862%,&'(&L1*"*21*@&"*7&MN1+&,+6"+%@E&
The reletively small initial investment required for Bolting Block to operate and
commercialise its product in the UK ( scenario 2) means we are in a position of
strengh when securing our first round of financing. We do not need to rely on large
investment from venture capital or angels and aim at securing the most attractive
source of investment as possible. This would involve a partnership, joint venture, or
equity investment from on of the manufacturing or retail companies we will work with.
Such a deal would be particularly attractive as it would guarantee the cooperation of
a party controling important assets in the value creation process. In particular, an
investment from a large DIY retailer would be optimal as it would create synergy in
marketing, logistics and strategy targets and would be beneficial for all parties.
Following this approach would also open the possibility for a buy out of fownders
shares in the long run, once these believe their product has been sufficiently well
implemented in the market.











1
9

O
.
/
&
!
1
;
%
$
1
*
%
L
1
@
8
6
%
&
P
&
,
3
'
G
,
&
+
3
%
&
+
1
;
%
$
1
*
%
&

2u