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Eco-Friendly Packaging Sector

Name:

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Institution:

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Date: 21/11/2024
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Executive Summary
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2.Industry Analysis of the Eco-Friendly Packaging Sector

2.1 Industry Size and Growth Rate

The sustainable packaging business has gained massive expansion in the past few years

owing to growing sensitization on the natural environment, reduction of plastics bags, and social

responsibilities of the companies. Industry reports shows that, the current global sustainable

packaging market was estimated to be at $250 billion in 2021, estimated to reach $ 404 billion at

a CAGR of 6.8% 2030(Abatan et al., 2024). This growth is expected to accelerate as more

organizations across industries, especially in the ecommerce and retail industry, switch towards

more sustainable forms of packaging (Abatan et al., 2024). However, the global initiatives for

more sustainability in packaging processes concern especially food and beverage, healthcare or

cosmetics industries.

2.2 Industry Structure (Porter’s Five Forces)

2.2.1Threat of New Entrants

The nature of entry barriers is moderate in the eco-friendly packaging sector. New

entrants in the sustainable packaging market are faced demanding capital investment costs for

sustainable material purchasing and production (Hermundsdottir & Aspelund, 2021). Further,

eco-friendly packaging firms have to incur costs on certifications, and sustainability audit as a

requirement for meeting these standards (Timea Šimonová et al., 2024). The current contenders

who have signed deals and built customer recognition still pose strategic problems to entrants.

Nevertheless, there is possibility of enthusiasm amongst consumers for niche participants to

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challenge established participants by proffering point solutions, small ones, or localized ones as

interest develops.

2.2.2Threat of Substitutes

The biggest competitors of ecologically friendly packaging are conventional plastic and

materials that are not biodegradable, and they are still cheaper and easier to acquire.

Nevertheless, as the emphasis on environmental protection strengthens all over the world, the

danger that the mentioned alternatives pose becomes unsignificant (Hermundsdottir & Aspelund,

2021). Sustainable packaging types such as biodegradable, renewable and reusable packaging

materials present various proposition like lower environmental effects which attract the green

lever consumers (Timea Šimonová et al., 2024). As more and more capacities are discovered

within the biodegradable and compostable materials, sustainable packaging will effectively

diminish the applicability of traditional packaging as a solution.

2.2.3Supplier Power

Suppliers of raw materials like plant-based plastics, recycled paper, and biopolymers are

moderately powerful because the sources for such products are scarce and the materials

themselves are specific to green industries (Hermundsdottir & Aspelund, 2021). The requirement

for certified sustainable material can be a plus to the suppliers but raise the cost of prices slightly.

Nevertheless, because of the growth of the industry the number of suppliers is increasing, and

this might mean that the supply chains become more diversified and businesses are not relying

on a single supplier.

2.2.4 Buyer Power

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Buyer power in the context of the sustainable packing market is relatively high,

especially referring to the large-scale buyers who are capable of ordering in large quantities or

presenting their own requirements for material quality. Sustainability adds pressure to consumers

and businesses alike, where businesses focus on green packaging solutions (Timea Šimonová et

al., 2024). The importance of transparency and corporate responsibilities make it important that

companies get closer to the buying community standards that are ethical and acceptable to the

environment.

2.2.5Competitive Rivalry

The intensity of competition is rather significant in the market of eco-friendly packaging

due to the domination of strategically important industry players like Amcor, Tetra Pak, as well

as Sealed Air, with the number of relatively small companies that specialize only in the field of

sustainable packaging (Hermundsdottir & Aspelund, 2021). The competition is based on the type

of material, product design, and sustainability accreditation (Timea Šimonová et al., 2024). The

market has attracted many players due to its high growth and anyone who enters this market

wants to gain domain which leads to a constant attempt at improving on technology and cutting

cost which makes competition an important rivalry in this market.

2.3. Key Success Factors

The major success factors for firms involved in the sustainable packaging industry

include getting accredited certifications from environmental organizations like FSC or USDA

Bio-Preferred, reducing cost and researching on a materials science. Another factor is the ability

to meet the orders of different scales, as well as the reduction of the cost per piece currently
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important for industries with a large number of orders such as the food packaging industry or

online stores (Timea Šimonová et al., 2024). Further, there are questions of firms’ compatibility

with and adherence to consumer values regarding sourcing transparency and the environment.

2.3.1 PEST Business Analysis

2.3.2Political

Rising environmental laws and policies internationally including complete bans on the

use of single-use plastics and incentives for greener solutions support the take-up of sustainable

packaging (Mahmoud et al., 2022). Governments are starting to define higher standards of

packaging waste disposal, thus pressuring companies to look for more environmentally friendly

materials.

2.3.3 Economic

This situation shows that companies across the industries organized to meet consumers’

goodwill about sustainability, including paying higher cost for green packaging (Mahmoud et al.,

2022). It is in line with this current trend that consumers are evidently okay to spend more

money on sustainable packaging which makes it feasible in the market for companies to come up

with sustainable packaging.

2.3.4 Social

Sustainability and environmental consciousness are more important than ever and many

consumers base their buying decisions on this aspect alone. This has precipitated increased
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demand for biodegradable, recyclable or compostable packaging materials which in turn has

cemented the industry’s growth path.

2.4 Industry Technological trend:

Recent innovations especially in materials sciences have made current biodegradable

materials more robust and adaptable. Various recent developments including plant-based

plastics, compostable resins, and water-soluble packaging solutions (Mahmoud et al., 2022).

These solutions are for compostable resins expanding the variety of opportunities that could be

realized within the packaging market and make way for continued diversification.

3.Market Analysis

3.1 Market Size and Growth Potential:

For several years now the packaging market that focuses on ecology has been rapidly

developing and there are no signs that indicate that its development can slow down a bit.

Currently, the market size of the eco-friendly packaging was nearly $237.8 billion in 2021, it is

expected to reach a CAGR of 7.4% during 2022-2030 (Research, 2023). These factors involve

things like the growth of the consumer’s concern for environmental issues, persistent policies on

banning single-use plastics and enormous system changes as big organizations embrace

sustainability (Research, 2023). The food and beverage sectors, and healthcare along with e-

commerce stand out as the most demanding for sustainable packaging materials and solutions, as

those industries are becoming increasingly pressured to minimize their impact on the

environment. In the food industry, there is a need for sustainable packaging as companies look

for non-plastic packaging to reduce on waste. Likewise, there is a growing trend of customers
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embracing the want of buying products from the internet and similarly there is a growing trend of

buyers who want environmentally friendly packing material (Research, 2023). There is a

significant potential for such a market growth for companies that operate in the field of using

biodegradable, compostable and recyclable packaging, which identifies the current niche of the

Eco-Friendly Packaging Company as the one with the potential for growth in demand.

3.2. Target Market:

3.2.1 Demographics:

The main target market of the Eco-Friendly Packaging Company is the core consumer

group comprising business and specific age of 25–45 years that have concern for social and

environmental issues. They are normally in the middle to the higher income group thus remain

willing and able to fund the relatively expensive RFBs (and, 2022). Furthermore, various

industries including the food and beverage industry, e-commerce business and retailing houses

are in harmony with the intended demographic seeking a sustainable solution for making

available products to end users and sustain corporate social responsibility mandate (and, 2022).

In this segment, companies are small to medium-sized since they seek affordable, customizable,

and sustainable packaging to entice and engage customer ecosystems that consider the

environment.

3.2.2 Psychographics

The psychographic characteristics are the green procurement/consumption focused

consumers/buyers and environmentally friendly or sustainable business organizations. These

consumers are fellows of sustainability; they would go for products and services they find

suitable in an ethical sense. Today’s consumers are willing to spend more for products from
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organizations that show concern for the environment (Ker[en]Xin et al., 2019). These customers

believe that environmental packaging is part of the overall product, and they are encouraged by

environmental reasons as well as environmentally-friendly measures. Correspondingly, business

targeting this specific psychographic segment are also incorporating green packaging as the

focus of their brand.

3.3. Competition Analysis

3.3.1 Competitors’ Profile

The packaging industry that focuses on the utilization of eco-friendly products has high

competition, in which leading players, including Amcor, Tetra Pak, and Sealed Air, invest in the

sustainable packaging delivery (Herbes et al., 2018). These competitors provide many kinds of

biodegradable and recyclable package, and they also have developed a strong basic research and

development prospect in this field. However, these big firms may tend to provide large scale

contracts for their long-term production processes which may at times ignore the aspects of the

small and medium sized firms. Other little players in the market offer computerized sustainable

packaging solutions for SMBs for instance Noissue and Packhelp. This makes it known that their

products are highly customizable for clients and despite that they charge averagely low prices

they are very reasonable. However, they could be less endowed with resource capital or may find

it difficult to top up the capital at this rate of innovation compared to the big firms.

3.3.2 Competitive Advantage Table

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Using the table above, I was able to draw attention to the strengths that involved high

customizations, focus on the Small & Medium Business sector, and environmentally friendly

business practices (Maziriri, 2020). In doing so, the company can appeal to customers in

consuming segments desiring customized offerings in a growing environmentalism trend. Using

this analysis, one is able to understand that the Eco-Friendly Packaging Company is well placed

to satisfy the demands of an expanding base of informed clients that are increasingly conscious

of the impact their packaging choices have on the environment and the continuing favorable

market trends regarding green packaging.

4. Business Description

4.1. Company Description

The Eco-Friendly Packaging Company is an environmentally responsible packaging

solutions specialist that aims at designing, manufacturing and supplying closely recyclable and

biodegradable packaging to all sorts of companies in different industries such as eCommerce,

food & beverage and retail. Built on the core values of sustainability and customer orientation,

the company’s goal is to provide customers with a wide range of sustainable and tailored
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packaging solutions that would meet new consumer and business needs. The aim of the Eco-

Friendly Packaging Company is to minimize the effects of packaging materials on the planet by

using environmentally sustainable materials in the packaging process throughout the life cycle.

4.2. Mission Statement

The business mission of the Eco-Friendly Packaging Company is to catalyze change

towards sustainable practices by providing environment-friendly, creative, and cost-effective

packaging systems. Based on a strong managerial ethic of environmentalism and customer

orientation it aims at being a decisive agent in the global shift away from single-use plastics and

excessive packaging. The goal of the Eco-Friendly Packaging Company is to help to make a

right choice for green packaging for many companies knowing that packaging can be effective

and environmentally friendly today.

4.3. Goals & Objectives

4.3.1 Short-Term Goals:

Establish Market Presence: Familiarize the new brand in the emerging green packaging

industry of which the main consumers will be the SML businesses in e-commerce and food

industries. Achieve Revenue Milestones: Achieve $500, 000 in the first year of operations

through extensive marketing and targeting programs on new customers in order to obtain initial

sales. Obtain Key Certifications: Obtain accreditation like FSC (Forest Stewardship Council) and

the USDA BioPreferred to support product legitimacy and a green mission.

4.3.2 Long-Term Goals:

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Market Penetration: Achieve sales growth that will grant the business 5% of the

sustainable packaging market share within the next five years. Expansion of Product Line:

Expand on existing product portfolios to adapt to the new material and technology development

like compostable films and biodegradable resins to fit all packaging requirements. Environmental

Impact Reduction: Starting an active carbon-offset program, the company should strive for

becoming carbon-neutral by the end of the fifth year of operation.

4.4. Legal Status and Ownership

The nature of business at Eco-Friendly Packaging Company is a Private Limited

Company; Sdn Bhd that protects the shareholders’ personal assets while accepting private equity

investment. The equity is distributed among the founding members; 70% to the primary

founders, and 30% for future investors as this is key to future expansion and funding (Maziriri,

2020). It also provides better management discretion in management-related decisions while the

company is financially ready for huge strategic expansions.

4.5. Products and Services:

4.5.1 Description:

The starter product line at the Eco-Friendly Packaging Company is the biodegradable

boxes, recyclable pouches, and compostable bags. These products are made from recycled paper,

bio-plastic, plant stoked plastics, and biopolymers and other natural substances. All of the

products are made to serve businesses that are environmentally conscious, and include options

such as quantity, design, and branding choices.

4.5.2 Customer Need Fulfillment:

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The products provided by the Eco-Friendly Packaging Company serve a basic need in the

increasingly conscious global market for packaging materials especially by industries that use

large amounts of packaging material. Customers then get products from sustainable resources

meeting their conscience embracing tendencies responding to legal requirements for minimal use

of single use plastics, non-recyclable materials. The products also strive to be durable and

functional to encourage sustainable business practices without quantities being neglected.

4.5.3 Unique Selling Points (USP)

The Eco-Friendly Packaging Company differentiates itself through several unique

features: Customizability: Themed packaging solutions for the targeted niche that include small

and mediums-sized enterprises. Sustainability Certifications: Commitment to acquire and sustain

accreditation from well recognized environmental NGOs (Sastre et al., 2022). Material

Innovation: Ongoing research to incorporate the latest biodegradable and recyclable materials to

fit into the market to avoid being replaced by the next best thing. Affordability: Achieving the

cost-efficiency that will enable sustainable choices to be affordable to different organizations,

especially S&MEs.

4.6. Management Team:

The management team consists of experienced professionals committed to leading the

company toward its sustainable goals: CEO – Alex Morgan: Alex has over 15 years of

experience in the business of sell sustainable products, being in charge of executive

management, product positions and sustainability of the company. COO – Priya Patel: Priya is

well conversant with operations as well as supply chain solutions that are supposed to be
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employed in the business operations in order to meet the environmental and efficiency

benchmarks.

CFO – Ryan Lee: Ryan’s work experience makes him financially literate especially in

sustainable investment part of the business that he leads in finding funding for growth and

expansion.

Head of Product Development – Sarah Kim: Sarah covers material science and

innovation in the area of convenience packaging that combines functionality and sustainability.

This sound organizational structure as a result puts the Eco-Friendly Packaging Company in a

good stead in the realization of its mission and business strategies given the wealth of experience

of leadership in those specialized fields of sustainability, operations, finance as well as product

development.

5. Marketing Plan

5.1. Marketing Strategy

The major strategic promotional tool proposed by the Eco-Friendly Packaging Company

is the establishment of market dominance by the use of sustainable packaging products. As such,

the company strives to build its brand by focusing on the ideal audience of conscious

businesspeople and consumers who would only settle for the best quality product made from

environmentally friendly raw materials packaged in an equally environmentally friendly manner

(Choudhuri et al., 2023). The marketing approach is guided by three strategic pillars:

Sustainability and Customization, and again Affordability.

5.1.1. Sustainability
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The Eco-Friendly Packaging Company will exclusively employ biodegradable,

recyclable and compostable materials; business owners looking for green packaging can find

relevant products here. Through obtaining the third-party certifications such as FSC and USDA

BioPreferred the company strengthens its commitment to customers.

5.1.2. Customization

Acknowledging the fact that every business enterprise would require different packaging

facilities the company provides a high quality of flexibility (Choudhuri et al., 2023). For

example, small and medium business can get design, dimensions and branding features to be

used for their products while the larger competitors cannot offer them at cheaper prices.

5.1.3. Affordability

Realizing that small firms need affordable packaging materials and solutions the Eco-

Friendly Packaging Company takes advantage of economies of scale and value chain

partnerships to offer its products cheaply while at the same time conforming to environmentally

friendly standards (Duarte et al., 2024). This pricing strategy avails the green packing to the

intended market as the company’s core mandate is to popularize eco-friendly packaging.

5.2. Marketing Mix (4Ps)

Some of the products from the Eco-Friendly Packaging Company include biodegradable boxes,

recyclable pouches, compostable bags, and plant-based plastics.

5.2.1 Product Variety

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The product also covers a wide range of industries such as food and beverage, cosmetics,

and even retail companies (Duarte et al., 2024). Flexibility of size and shape ensures that firms

obtain the right packaging that will suit their needs.

5.2.2 Price

The Eco-Friendly Packaging Company uses the Competitive Pricing Strategy in its

packaging materials because of Expense (Yusiana et al., 2020). Pricing is well thought to be

affordable in the market while still serving to cater for the expenses of green materials. Key

pricing components include: Bulk Discounts: The large volumes are offered at lower prices to

make the companies smoothen their sustainability goals with long-term commitments. The

discount programs listed fall under appealing to number one, and are as follows: The discount

structure is made to help absorb the cost of packaging for large quantities (Yusiana et al., 2020).

Subscription Model: There is also provision of subscription where businesses that use the

company’s services frequently in terms of packaging are given a concessional price. As for the

company, it carries advantages of recurrent revenues and improved customer loyalty to the brand

as well. Tiered Pricing: A skyscraper model of prices gives the customers an option of

purchasing a product that is within their financial capability and bear the sustainable impacts of

the product. For example, when improving the established materials, the cost may be higher for

selecting premium or certified materials, while the cost of standard options that remain

environmental is lower.

5.2.3 Promotion

Promotional activities are aimed at use of the internet, collaboration with other firms and

company participation in trade fairs and exhibitions with the ultimate goal of creating a brand
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personality and trust in the Eco-Friendly Packaging Company. Promotional activities include:

Digital Campaigns: social media (Instagram, Linkedln, Facebook, TikTok) will be used to

market products, status on sustainability and case studies from clients (Yusiana et al., 2020). Ads

are targeted to stimulate the organic consumerism and business owners who are environmentally

friendly. Content Marketing: Through the channel of content marketing, the company will share

valuable information with the potential customers, about sustainability issues, packaging trends,

as well as the importance of using more ecological packaging styles (Yusiana et al., 2020). New

posts on the blog will be created at least twice a week, new infographics at least once a week,

and new videos on the YouTube channel at least once a week. Influencer Partnerships: When

using influencers to work together, the reach is expanded to a wider audience with similar ideas

toward sustainability (Garg et al., 2024). These influencers will promote the company’s products

and its values endorsing sustainable packaging as a responsible move for any conscious

company.

2.4 Place

The targeted consumer group of the company is accessed through this multiple

distribution channel strategy available at shops. The primary sales channels are: Online Sales

Platform: The company’s homepage contains overviews of the products as well as information

about orders and accounts (Yusiana et al., 2020). Designed to enhance the customer’s

experience, select products are directly accessible, orders may be customized, and subscriptions

measured. Direct B2B Sales: For the massive business clients, the company sales team

undertakes the sales solicitations and advises the clients (Garg et al., 2024). This approach also

helps the company in developing solutions relevant to certain clients hence building a strong and

long-term business bond (Yusiana et al., 2020). Partnerships with Retailers: To access consumers
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who might keep purchasing in the physical stores, the company works with relevant stores that

have sustainable values, supporting small businesses. Such arrangements allow the company to

grow its operative space while not overstating fixed space stores.

3. Timeline of Activities

For effectiveness in calendars the promotional efforts and strategic initiatives leads to

develop the following calendar: This calendar synchronizes marketing tasks with a business plan

by quarter and delineates route maps to execute a campaign, partnership, and growth for the

marketing team (Yusiana et al., 2020).

Quarter Marketing Activities

Q1: Launch Phase Place ads in different social networks, in order to create a brand recognition.

Create alignments with influencers in sustainability to use the products as platforms to

showcase themselves.

- Post basic materials on the website (for example, blog articles, sustainability manuals).

- The first targeted ads for eco-conscious events to sponsor and attend our business.

Q2: Growth Phase – Investigate and launch content marketing campaign on benefits of eco-friendly

packaging.

– Design new products and services and then share the good news by email and social

media outlets.

Since they recommend their products and services to customers, the company should

launch a referral program.

We buy environmentally spare parts and accessories from environmentally friendly

stores and sell them in specific regions.

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Q3: Engagement Invite the founders to an online presentation or answer questions regarding sustainable

Phase packaging.

- Specifically, there will be more attention to B2B strategies for subscription types of

clients.

create images or user testimonials with current clients.

Q4: Consolidation – Provide loyalty rewards for those consumers who are paying for subscription.

Phase

- Launch an end-of-year sale to boost the sales of the company.

It should be required to publish the annual report on the company’s impact to the

environment.

Coordinates annual partnership and campaign calendar in response to results and decal.

The above time-flow of action will guide marketing communication activities aiming at building

brand familiarity, acquiring customers and growing them throughout the year (Garg et al., 2024).

The phased approach gives the marketing team the flexibility of adapting and making

improvements where necessary due to the data received from the market.

6. Operational Plan

6.1. Staffing and Employee Needs:

Due to its status as an Eco-Friendly Packaging Company, the company needs a

competent and committed pool of employees who will determine production, quality assurance,

supply chain, and new ideas on packaging that is environmentally conscious. Requirements for

employees are categorized based on core operational positions without which the company’s

goals of producing environmentally friendly products and creating a satisfied customer base

would not be possible.

6.1.1 Production Team:

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This team is responsible for the general production to guarantee that products are

manufactured as required. This would embrace the working and operating personal as well

individuals such as quality assurance technicians, production line supervisors, and machine

operators. Every working member of a team is instructed on safety measures; appropriate

utilization of resources and proper handling of equipment that will help him/her contribute to

environmental conservation.

6.1.2.

Research and Development (R&D) Team: R&D personal deal with material selection,

new environmentally friendly material discovery, and product modification. In the technology

advancement of biodegradable and recyclable materials, this team associates closely with

suppliers, offer value-added products to meet customers’ demands for innovative sustainable

alternatives.

6.1.3. Sales and Customer Support Team

This team is in charge of the contracts which include business relations, general customer

contacts, and orders (Silva & Pålsson, 2022). Regarding training, there is focus on product

knowledge, customer relations, and such things like the tendencies in the sphere of sustainability

to be able to deliver particular solutions based on client’s requirements.

6.1.4. Logistics and Inventory Management Team

Logistics employees know how much of each product must be stored, how products

should be transported, and when products should be delivered (Silva & Pålsson, 2022). As a part

of corporate responsibility and to curb on expenses incurred on stocks, they are experienced in

methods of prudent stock handling with the aim of minimizing wastage activities.
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6.2. Location:

Inherently, the main corporate office and major production plant are situated in an

environmentally-sensitive commercial park which focuses on sustainability. This Austin thus not

only eliminate carbon emissions cuts of transportations and logistics but also locates the Eco-

Friendly Packaging Company to strategic market suppliers and distributors. Sited in a country

which offers tax benefits to environment friendly organizations, this location decision helps the

company in its twin objectives of reducing cost and preserving environment. Evaluating the

utility, the building layout to suggest energy conservation, with natural lighting and recycle

procedures as well.

6.3. Facilities and Equipment

The machinery used at the production facility is state-of-the-art, energy-efficient to

encourage sustainability to the packaging manufacturing. Some of the equipment are

biodegradable packaging molders, compostable film extrusion machines and ecological printer

for designs and messages (Abdullah, 2020). All machines are selected with regard to its energy

conserving capabilities and compliant with environmentally friendly production processes. For

efficiency in sustainability the facility employs the utilization of LED lights, energy conserving

Heating Ventilation and Air Conditioning systems and water efficient technologies (Abdullah,

2020). Any wastes that may be generated from the production process including scrap materials

used in production are either processed in-house or taken to recycling facilities approved

environment compliance. Maintenance of equipment and replacement of damaged ones

guarantee that appliances work to the optimum limit, decreasing resource use and simplifying

process circulation.
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6.4. Supply Chain

The supply chain of the Eco-Friendly Packaging company covers procurement of ecological

materials, inventory control and building good relationships with the vendors.

6.4.1. Sourcing Raw Materials

The company sources elements from suppliers that support biodegradable, recyclable and

compost able products like plant-based plastics, recycled paper and biopolymers. Partners who

work with the business are also vetted to conform to environmental requirements so that the

firm’s green branding can be honored.

6.4.2. Inventory Management

It is pointed out that the company has integrated a sophisticated inventory control system

to review stock status and usage/trend analysis for production needs and control of wastage. By

managing demand forecasts well, the company can properly allocate its resources in the intended

production strategies without the risk of overstock and extra expenses of storing the surplus.

Business inventory processes are effectively controlled to meet supply needs and customer

demand in a way that enhances business operations.

6.4.3. Vendor Partnerships

The vendor partnership maintains proper business relations with vendors because of the

selection process that gives value to sustainable practices. These relationships provide the Eco-

Friendly Packaging Company with an opportunity to source raw materials of the highest quality

and quality for purchasing in large quantities to enable production of packaging materials in a

cost-effective manner (Wandosell et al., 2021). Also, the company works with logistics service
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providers who practice green logistics transport hence minimizing on the environmental impacts

of the transport activities within the supply chain. (Biswas & Sarker, 2020) Lastly, the Eco-

Friendly Packaging Company operational plan focuses on human resource management, the right

location, environmentally friendly structures, and supply chain system that is environmentally

conscious as per the business’s operational values (Biswas & Sarker, 2020). Hiring competent

employee, use of energy products in machinery, and use of materials friendly to the environment

will support the firms’ goals of attaining the production objectives and quality and its objective

of dominating the green packaging industry.

7.Financial Plan

7.1. Sources and Uses of Funds Statement

This statement gives an account of the basic required capital and on how the capital will

be utilized. The capital required in the Eco-Friendly Packaging Company is expected to be

$500,000 comprising of founder investment $250,000 (50%), business loan $170,000 (30%) and

private investors $80,000 (20%).

Funding Sources Amount ($)

Founder Contributions $250,000

Small Business Loan $150,000

Private Investors $100,000

Total Funding $500,000

Figure 1: Sources of funds

Uses of Funds
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Expense Category Amount ($)

Facility Rental and Setup $120,000

Machinery and Equipment $150,000

Initial Inventory (Sustainable Materials) $80,000

Marketing and Promotion $50,000

Working Capital $60,000

Licensing and Certifications $40,000

Total Uses $500,000

Figure 2: Uses of funds

7.2. Assumptions Sheet

This financial projection is anchored on a realistic market demand for the product, operation

costs, and an expected growth rate towards the eco-friendly packaging market.

Sales Growth Rate: Projected to grow at a rate of 10 percent per year because of the continuously

rising need for eco-friendly packaging.

Cost of Goods Sold (COGS): Out of total revenue, probably costs for materials and production

by estimate of 40%.

Operating Expenses: Forecasted to be approximately 30% of total revenues, it is used to finance

employee compensation, facility expenses and other miscellaneous expenses.

Income Tax Rate: Taken at 20% for the purposes of working capital profitability analysis.

Depreciation: There is straight line depreciation used on the equipment which was depreciated

over 5 years.

7.3. Sales Forecast:

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The future sales for the Eco-Friendly Packaging Company indicates that that particular company

is expected to grow in line with trends as pointed out below. The forecast is based on small to

medium sized business with e-commerce and retail sectors as target markets with year-over-year

growth as the company establishes market position.

Year Projected Sales ($)

Year 1 $300,000

Year 2 $400,000

Year 3 $500,000

Figure 3: sales forecast

7.4. Financial Statements:

Evaluating the financial performance of the company, the company’s Financial Statements

presents the financial data in a way that allows for three-year comparison.

7.4.1 Income Statement:

The income statement shows projected revenues, cost of goods, operating expenses, and net

income for Years 1 to 3.

Item Year 1 ($) Year 2 ($) Year 3 ($)

Total Sales 300,000 400,000 500,000

Cost of Goods Sold 120,000 160,000 200,000

Gross Profit 180,000 240,000 300,000

Operating Expenses 90,000 100,000 120,000

Net Income (Pre-Tax) 90,000 140,000 180,000

Income Tax (20%) 18,000 28,000 36,000

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Net Income 72,000 112,000 144,000

Figure 4: Income statement from year 1 to year 3

4.2 Cash Flow Statement

The case flow statement shows the monthly revenue and expenditure by the company to

guarantee availability of cash for its daily activities.

Month Cash Inflows ($) Cash Outflows Net Cash Flow ($)

($)

Month 1 25,000 20,000 5,000

Month 2 30,000 25,000 5,000

… … … …

Total (12 350,000 280,000 70,000

Months)

Figure 5: Cash flow statement

4.3 Balance Sheet:

It demonstrates organizational resources, claims against the company or obligations and

shareholders’ funds at the close of each year.

Item Year 1 ($) Year 2 ($) Year 3 ($)

Current Assets 100,000 120,000 140,000

Long-Term Assets 150,000 140,000 130,000

Total Assets 250,000 260,000 270,000

Current Liabilities 60,000 50,000 40,000

Long-Term Liabilities 100,000 90,000 80,000

Total Liabilities 160,000 140,000 120,000

 27

Equity 90,000 120,000 150,000

Figure 6: Balance sheet

5. Break-Even Analysis:

Break-even analysis determines the number of sales, which is needs to cover fixed costs and

variable costs to find out the minimum sale level.

 Fixed Expenses: $90,000 annually

 Contribution Margin: it is ranging from $60% (70% gross profit margin using the sales

and cost of goods sold)

Therefore, a company requires $150,000 to break-even the sale annually.

Using the break-even formula below:

Expenses 90,000
Break−Even Sales=¿ = =150,000
Contribution margin 0.60

6. Ratio Analysis

The eco-friendly packaging company financial ratios give us a window through which we can

analyze its financial health and performance.

Figure 6: Ratio Analysis

Ratio Year 1 Year 2 Year 3

Return on Equity 80% 93% 96%

Current Ratio 1.67 2.4 3.5

Quick Ratio 1.5 2.1 3.2

Debt to Equity Ratio 1.78 1.17 0.80

Gross Profit Margin 60% 60% 60%

 28

Net Profit Margin 24% 28% 29%

These ratios exemplify attractive profitability, and high liquidity coupled with continuously

diminishing debt equity ratio that testifies the company is on the right track to improving its

financial health.
 29

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9.Appendix

Figure 1: Sources of funds

Funding Sources Amount ($)

Founder Contributions $250,000

Small Business Loan $150,000

Private Investors $100,000

Total Funding $500,000

Figure 2: Uses of funds

Expense Category Amount ($)

Facility Rental and Setup $120,000

Machinery and Equipment $150,000

Initial Inventory (Sustainable Materials) $80,000

Marketing and Promotion $50,000

Working Capital $60,000

Licensing and Certifications $40,000

Total Uses $500,000

Figure 3: sales forecast

 33

Year Projected Sales ($)

Year 1 $300,000

Year 2 $400,000

Year 3 $500,000

Item Year 1 ($) Year 2 ($) Year 3 ($)

Total Sales 300,000 400,000 500,000

Cost of Goods Sold 120,000 160,000 200,000

Gross Profit 180,000 240,000 300,000

Operating Expenses 90,000 100,000 120,000

Net Income (Pre-Tax) 90,000 140,000 180,000

Income Tax (20%) 18,000 28,000 36,000

Net Income 72,000 112,000 144,000

Figure 4: Income statement from year 1 to year 3

Figure 5: Cash flow statement

Month Cash Inflows ($) Cash Outflows Net Cash Flow ($)

($)

Month 1 25,000 20,000 5,000

Month 2 30,000 25,000 5,000

… … … …

Total (12 350,000 280,000 70,000

Months)
 34

Figure 6: Balance sheet

Item Year 1 ($) Year 2 ($) Year 3 ($)

Current Assets 100,000 120,000 140,000

Long-Term Assets 150,000 140,000 130,000

Total Assets 250,000 260,000 270,000

Current Liabilities 60,000 50,000 40,000

Long-Term Liabilities 100,000 90,000 80,000

Total Liabilities 160,000 140,000 120,000

Equity 90,000 120,000 150,000