Business Plan for a New Product

Question: Explain the business plan for a new product that is going to be launched by a company that would be established in the market of Singapore. Answer: 1. Executive Summary The study establishes a business plan for a new product that is going to be launched by a company that would be established in the market of Singapore. It is an end to end product that is named as Rotihome. By opportunity analysis, it has been found that there is a high demand for such kind of products. The business mainly targets Indian and people from Middle East who live in Singapore. They cannot consume the popular Indian cuisine flattened bread Roti due to their busy schedule. Thus, the product would be facilitated in such a way that it would help them to cook in less period of time. Here, the business plan is made for launching the product in the market and grab the market demand as well. The company plans to make 8% growth and achieve success in the year 2016. As per their objectives, vision and mission, the business plan is made. 2. Business Details This is the new business that is going to be start up in the market of Singapore. Through analyzing the scope and opportunity of the existing market, the new business would be established that offer a product that helps to make Indian cuisine. It has been decided that the business would be opened in the city Novena and named as Indian Cuisine Centre. The new proposed venture to be introduced by this business is the product Rotihome that would help make various Indian flat bread dishes. It has been found that cooking the form of bread Roti is a lengthy and tiring procedure. Apart from this, it is time consuming and thus most of the Indians in Singapore avoid cooking this item. Through opportunity analysis, it has been found that there is a demand for this product in the market of Singapore. The vision statement of this business is We establish high standards and build success in delivering such products that helps to make Indian cuisine of regular meal category. It helps to generate long term sustainable competitive advantage. The mission statement of this business is We are dedicated to our promise of delivering such product that provide best quality of Indian bread form that suits the local taste of the customers, in order to enrich their health and lives as well. Their prime aim and objectives are as follows: To launch new business with new proposed venture in order to offer best Indian cuisines to the local people. To establish themselves as the best business delivering products which help make best regular meal categories. To generate 8% growth in the year 2016 and ensure a consistent growth thereafter. 3. Industry and Market Analysis Market Analysis: The market analysis for this particular business is done with the help of the SLEPT Analysis Model. Grnig and Khn (2015) opined that the SLEPT analysis helps to analyze the macro environment aspects that include social, legal, economic, political, and technological factors. Furthermore, this technique helps in competitor analysis to know the threats and opportunity of the business along the strengths and weaknesses of the business (Teoh et al. 2013). The SLEPT analysis for this particular business is demonstrated in the below table: Factors Analysis Social factor As per the record of 2015, 7.4% of the Singapore population is Indian (Teoh et al. 2013). It is one of the cosmopolitan developed cities where most of the people are engaged in several career platforms. Legal factor It has been found that new businesses can freely enter in the market of Singapore. As per the Companies Act 2013, all the businesses need to be registered with ACRA (Accounting and Corporate Regulatory Authority). Economic factor The continuous growing GDP growth rate delivers positive sign to start up a new business. Political factor The stable economic policy made the political environment of Singapore stable. Further, the single party ruling state helps the business to run under a stable business market. Technological factor Technological innovation is the prime reason behind the growth. This is the reason that the state is known as New York of the East and Emporium of the East. Table 1: SLEPT Analysis (Source: Teoh et al. 2013) Industry Analysis: In order go through the industry analysis, the Porters Five Forces Model is considered here. According to Zhao et al. (2016), it is the micro environment analysis that helps to analyze as well as determine the level of competition in the present business market. The Porters Five Forces analysis for this business is illustrated in the below table: Forces Analysis Threat of New entrants The threat is in Medium Level. It has been mentioned that starting up a new business in Singapore is way much easy. It is expected that the new business would be launched once it successfully grabs the market. Threats of Subtitute product The threat is in Low Level. No substitute product of Rotihome is present in the market of Singapore. Bargaining power of Customers The bargaining power of the customers is Low. It has been noticed that it has a high demand in the market. Bargaining power of supplier The bargaining power of the supplier is High. As the demand is high and no substitutes are available, the suppliers have the power over the product price. Intensity of competitive rivalry The intensity of competitive rivalry is High. Large numbers of products are present and available offered by the brands like Samsung, LG, Phillips and many more. They might imitate this idea in order to grab greater market share. Table 2: Porters Five Forces Analysis (Source: Created by Author) 4. Customers and Value Proposition The business is targeting the middle and upper class working individuals of Singapore. It has been expected that they would able to attract the age group of 16-70 years. In order to be more precise, the business mainly targets Indians who live in Singapore. Along with that, this particular product has gained popularity due to their health benefits and tastes. Thus, it is expected that they would able to attract the people of other cultures also. However, mainly the people from India and Middle East cook and like to consume this flattened bread every day. Due to their busy schedule, customers often switch to consume other products. Thus, the businesss aim is to target and attract those consumers among whom there is high demand for this product. In order to attract more number of customers, the business has formulated a USP (Unique Value Proposition) that helps to offer unique quality that its competitors are lacking in. The USP for the product Rotihome is as follows: It offers taste along with health benefits in their regular meal. People are able to include tasty meals in their healthy diet list. The products would be offered at lower prices. Many features will be provided where large number of dishes of flattened bread can be made. It has been mentioned earlier that cooking this flattened bread is time consuming in nature. Along with that, it needs perfection in adjusting softness, crispiness, quantity of oil and thickness of the bread. The USP of this product not only saves their time, but also offers best quality product. Furthermore, by including large options, they would able to achieve its objectives and also restrain the future threat which they might face from the competitors. The sales target for 2016: As per their target, they would generate 8% growth in their sales. 5. Marketing Strategy As stated by Krush et al. (2016), the marketing strategy helps to attain the ultimate objectives of the business. The marketing strategy for this business is discussed in the below section. Marketing Mix Approach: The marketing mix approach helps to establish right combinations of product, place and time (Barrett and Weinstein 2015). In this case, the 4Ps marketing mix strategy has been considered. 4 Ps of marketing mix Strategies Product The product Rotihome is an end to end product which is different from the dough makers which are available in the market. The product would be facilitated in such a way that the user needs to input certain amount of flour and water only. People They target the people who are from India and Middle East. In order to be more precise, they targeted the age group of 16-70 years belonging from the upper and middle social classes. Place The business would be established in the market of Novena. As it is in the centre area of Singapore, the business would able to attract more number of customers. Promotion The product would be promoted with USB storage in order to train the users with video sessions. Along with that, EMI options would be provided when purchasing the product. Table 3: Marketing Mix Strategy (Source: Created by Author) Launch Strategy: Following the statement of Vlasov and Mark-Herbert (2016), successful product launch strategy helps the organizations to attract more number of customers. Here, the business management has decided to incorporate certain strategies to boost the sales of the product. Before launching this product in the market, they would promote their product through TV and social media sites. Apart from this, the product would be offered at half the price when purchasing on the day of its launch. It has been mentioned that there is high demand among the Indians for this kind of products. The half price strategy would help to attract other customers who are not belonging to the Indian or Middle Eastern culture. They want to attract the most possible number of buyers as it would help them to apply the word-of-mouth strategy. Sales tactics: They would incorporate the EMI option for the first six months. It would help them to attract the price and cost conscious customers. It has been found that some people belonging to the age group 16-25 years are not easily influenced by such kinds of product. They are not much bothered about their health and do not tend to change their habits (Hunt 2015). Thus, they might not want to spend money on purchasing this product. However, the EMI option would influence their buying decision. Brand Development: In order to develop the brand name and brand image, they would display their product in an attractive way in the social media sites. Less frequency advertisements on TV would be considered in order to make the users know about the new product. These strategies would help them to make a brand image among the consumers. Competitive Reaction: It has been mentioned that no close substitutes are existent in the market at present, thus they have high a competitive advantage. However, as some dough makers are available in the market, they need to add some visual attraction in the advertisements of this product. Product and Market Development: In order to develop the product, the company would engage a research and development team. The team would ensure that the product includes all the features which they decided to offer. Furthermore, they would enhance the awareness of the need and value of the product to develop the market for this product. Growth Potential: After achieving the growth in the present year, the company would plan to enhance their business in other parts of Singapore within the 2020. The long term goal of the company is to make it an international business. 6. Operations Plan Key operating activities: The business would engage a research and development team to develop this particular product and ensure that all features are included. The management of the business would set a schedule plan for manufacturing and launching the product. Along with these operating activities, they would operate the expense as per their budget plan. Business Controls: All the operating activities of the business are controlled by the control system of the organizations. The management team would involve a team that would monitor all the activities. They would ensure that all the operations are implemented as per the outlined schedule. Furthermore, they would control the performance of the employees so that the managers of the company can improve the employability skills of the employees. Scalability: As per the statement of Nielsen and Lund (2015), the scalability of a business defines the ability of that business in handling the business operations in order to accommodate growth. It has been mentioned that they expect to generate 8% growth in the year 2016. As per their planning and strategies, they expect to attain that growth in that specific time period. In such a case, if the organization is able to increase the demand for that particular product, they would able to increase a small bit in price and generate more profit. In such circumstances, the business would include a clause on scalability in its contract with supplier. If the demand exceeds beyond the estimated figure, the company would enhance their logistic network to meet the demand. 7. Management Team and Company Structure The key people of the business are the management team that directs all the stakeholders in the proper direction. The key people in the management team include the Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO), marketing manager and production manager. They belong to the top management team that mainly looks over the entire business operations. All the business decisions are made by the team in order to drive the business towards growth and success. Other key members are the operation managers and professional staffs. The operation managers handle the issues and constraints that the staffs confront in operating the activities. Moreover, the main functions or the business operations are handled by the professional staffs. However, the management team needs to identify other key people in order to support them in achieving their individual goals. This would help them to build a good employee relation which further strengthens the business o perations. As discussed by Parks, Olson and Bokor (2015), it is essential to make the business structure before initiating the business. In this case, the respective organization would select the legal structure in order to estimate the tax amount that they need to pay for establishing in the market of Singapore. This would help to identify the ability of the business in raising money. Furthermore, this would clear which kind of liability they are going to confront in the new business market. They have decided not to be involved in partnership businesses in the next 3 years. Sole proprietorship is considered in this case where the business is owned by a single individual. 8. Resources Premises and facilities: The management of the business has decided to establish the business in the city, Novena. The business premise is decided to be established in this area due to the presence of a large population. As it is located in the center of Singapore, large number of population is travelled for business purpose. The business targets people who are not able to make healthy or time consuming food due to their busy schedule. Furthermore, all the facilities that the company needs in starting up the new business are well available in this area. Machinery and equipment: The machinery and equipment are the main part of manufacturing the product. The organization has decided to incorporate modern equipments in the business. Thus, they need large amount of capital to start up that business. In order to restrict the fixed cost of the business, they balance their expenses in other contexts. Staff: As the company would include expensive machinery equipments, they tend to employ smaller number of employees in order to restrain the total expenditure. However, the staffs would be trained well so that the business would not have to confront risk or uncertainty. As the company is going to establish a new business, it is essential to make their human resources strong. It is the key factor that helps generate growth and achieve success within the outlined time frame. 9. Financing It has been decided by the owner of the company to keep total a capital of $2000000 for the overall business. At the same time, the owner has also decided to provide $700000 from personal savings and the rest $1300000 will be funded by the external sources. The company has a plan to take a long term bank loan. Therefore, the gearing ratio of the company will be 185.71 (approx). 10. Financial Projections Projection of income of the company (Refers to appendix 1) Projection of cash flow Projected cash flow statement Particulars 2017 2018 2019 2020 2021 Profit for the year (10389) 12028 15740 13462 12566 Cash from operating activities: Increase in current assets (179) (160) (140) (170) (160) Increase in current liabilities 140 190 130 210 140 Net cash from operating activities (30) 30 (10) 40 (20) Cash from investing activities: Investment in Fixed assets (1100) (1400) (700) (1100) (1800) Net cash from investing activities (1100) (1400) (700) (1100) (1800) Cash from financing activities: Borrowing loan 1300000 0 0 10000 0 Net cash from financing activities 1300000 0 0 10000 0 Net cash inflows 1288481 10658 15030 22402 10746 Table 4: Projection of cash flow (Source: Created by Author) In the above cash flow statement, it can be seen that in the first year of the business, the company will have much high cash inflows. This will be because in the first year, the company will take a bank loan, for which the cash inflow from the financing activities will be higher. However, in the other years the cash inflows will be much lower. It is also needed to be mentioned that in all the years the cash inflows will be positive for the company. Key Ratios According to the budgeted financial figures of the company, the profitability ratios of the company will be fluctuating in the first five years. In the first year the profitability ratio will be -21.87, which will increase in the 2nd year to 18.14 and in 3rd year, this will be 19.68. In the fourth and fifth year, the profitability ratio will be 15.54 and 14.24. 11. Risk and Strategic Options It has been mentioned that the new product does not have close substitutes in the present market. Thus, the business would not receive strong threat from the competitors at the initial stage. It clears the fact that the risk from the competitors is less. Moreover, the business has a high risk as they might receive threat from the customers. In such a case, if the business fails to perform well in the market of Singapore, they might face loss. Besides, their further plans and strategies depend on the performance of the product. In the present situation, the management team would formulate more strategic options which would be utilized in case the initial strategy fails to achieve its goal. Their strategy mainly focuses on attracting customers by effective advertising procedures. 12. Key Milestones The key milestone of this business is the return of their investment. In this context, it can be stated that their first key milestone will be the first positive return. However, it is important to maintain as well as enhance the return in order to generate growth and increase the revenue. Besides, the key milestone would help the company to achieve their mission and vision and enhance their financial performance as well. 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