Express Coffee - General Analysis and Operational Plan - Case Study Example

Business Plan TABLE OF CONTENTS 1. executive summary 1 2. Introduction 2 1.1. Purpose 2 1.2. Description of the product/service 2 1.3. Background 2 1.4. Scope 2 1.5. Assumptions 3 3. GENERAL analysis 4 1.6. Business Mission 4 1.7. Business Structure and Management 4 1.8. Market Environment 4 1.9. Plant & Equipment 5 1.10. Skills Assessment 5 1.11. Risk Analysis 5 4. operational plan 7 1.12. Key Business Objectives 7 1.13. Marketing 8 1.14. Financial Plan 11 APPENDICIES 1. executive summary Express Coffee which is looking towards starting a coffee chain in China is aiming the universities and colleges and looks towards the increasnig students’ base. The business model also has been designed in such a manner they look towards providing students with different variants of coffee at the shortest possible time. The company has also looked towards having a unique selling proposition where they look towards providing customers coffee on the same cup by numbering the number of time the customer drinks the same brand of coffee. Further, the also look to ensure that the cup is made from specially designed materials. The financial analysis shows that the business will be able to generate profits and achieve break even over a period of time. The manner in which Express Coffee has looked towards obtaining the finance will ensure that the business will be able to ensure sufficient finance. The different areas like the marketing and the targeted customers reflect the manner in which Express Coffee is looking to serve its customers and will ensure that the business is able to earn profits over a loner period of time. 2. Introduction 1.1. Purpose The report looks to present the manner the demand for coffee has grown in universities and campuses and looks towards determining a mechanism that will help Express Coffee to establish and develop its business in China. The report also looks towards identifying the network that the business will look to follow along with a complete description of the financials. It also presents the manner in which the marketing will take place and look forward towards highlighting the unique selling proposition and other aspect which will help Express Coffee to ensure that they are able to sell their products to a large customer base. 1.2. Description of the product/service The new business will use a name call “Express Coffee”, as this new coffee shop is mainly aim at the university student, therefore the new coffee shop name is called “Express Coffee”, as students are busy, and mostly just want to buy a cup of coffee and take it into class and drink, so it is very important that to deliver the goods on time for this business (Korey, 2006). Beside this, “Express Coffee” also have a new idea, it’s to mark down how many times does the consumer has been drinking the coffee into their cup, for example, a customers come in and want to get a cup of latte, the staff will make a coffee and after that the staff will write down a number like 3 or 4 times on the cup, so it will show that to customers how many times did they drink the coffee per day or per week. 1.3. Background The business is looking towards ensuring that they are able to manage their financials properly so that the business doesn’t gets into a financial problem. Further, the company has also looked towards developing a marketing plan by understanding the external environment and looks towards presenting a mechanism through which the business will be able to perform better over a long period of time 1.4. Scope The assignment looks towards presenting different facts and looks towards identifying the manner the business looks towards developing a potential niche market in Chinese universities by looking towards the student segment of the population. Further, being able to ensure proper strategies and molding it to their business requirements is an area that the business looks to present. 1.5. Assumptions The assignment has certain assumption as The analysis is based on past analysis and performance and the demand which might result in the new venture to be unprofitable The analysis looks towards starting a new venture for the Chinese universities which might not be well accepted as it hasn’t been tested against similar business proposition that the country has witnessed. 3. GENERAL analysis 1.6. Business Mission The mission of Express Coffee is to provide students who have limited time with a wide range of coffee to choose from which they can carry and will be made available within the shortest duration possible. Express Coffee not just selling coffee, the shop will offer a variety of range for customers, like chocolate milk, tea, milk tea and more, some snacks will also be provide inside the shop like chocolate muffins, cheese cake. The aim is thereby to ensure that the students are provided with maximum features which enhances the pleasure of drinking coffee 1.7. Business Structure and Management The business looks towards following a joint venture model where it looks towards tying up with other players in the market so that proper services can be provided. The business model chosen by Express Coffee is one where it is possible to ensure a direct interaction between the customer and the retailer. The company on this front also looks towards using technology so that they can be directly associated with customers through their websites and highlight the different type of coffee that is available (Czinkota & Ronkainen, 2004). Thus, the business model looks towards using direct relationship model with the customers so that their requirements can be easily met. 1.8. Market Environment The manner in which Express Coffee is looking towards delivering services will ensure that they are able to create a niche market for themselves. The fact that Express Coffee is concentrating on universities and colleges it will help to reduce the degree of competition that is prevalent as their efforts will be directed in a different direction. This will also ensure that Express Coffee is able to look towards younger group and having different variants of coffee and easy availability at the quickess possible time will ensure that Express Coffee is able to provide quality service. The business has also looked towards ensuring that they provide quality service and look towards satisfying the customers by providing various facilities like chocolate milk, tea, milk tea and more, some snacks will also be provide inside the shop like chocolate muffins, cheese cake. The increasing demand for coffee and its products already provides an opportunity which Express Coffee needs to look into. This will ensure that they are able to properly direct their services and by ensuring that they look into improving their services will ensure limited competition and will help the business to ensure proper opportunities of growth 1.9. Plant & Equipment Express Coffee looks towards providing coffee to its customers which thereby reduces the dependence on plant and equipment. Express Coffee has to ascertain that they have freshly plucked beans which are processed to make fresh coffee. This reduces the requirements of large machineries and will require small equipments to process it. This also increases the importance of having a strong supplier relationship so that fresh beans are easily available and the coffee giant is able to provide complete justice to its services. 1.10. Skills Assessment The business requires complete involvement on the part of the proprietor and its staff. Since, the business is involved in providing quality service and looks towards the service sector so it is important that the business looks towards hiring the best talent that is available. This will ensure that the employees are able to provide quality service and will help the management to ensure better services. This will also ensure that Express Coffee is able to work on its mission and will help to ensure better services for its customers. 1.11. Risk Analysis Express Coffee has to undergo different risk and needs to evaluate those. This will help Express Coffee to understand the direction they need to work on. It will also help the business to ensure that they are able to make proper strategies for the future. The SWOT analysis which has been highlighted in the appendix shows that a vast opportunity is present for in the Chinese university as there is an increase demand for quick service due to lack of time. The risk which Express Coffee has to look into and look towards minimizing it is that the business has to ensure that they look towards dealing with the rising consumer demand in an effective manner. The business has to ensure that they evaluate the various risks that the business is facing especially due to concerns related to rising obesity and increased consumption of coffee that is witnessed by the business (Khoury, 2004). This makes it important that Express Coffee looks towards weighing the different risk properly and looks towards evaluating the risk so that strategies can be drawn. An area to watch out for Express Coffee is the increasing competition that the industry is facing. Since, they are looking towards a specialized market the magnitude is limited but it makes it important that service is of high quality. This will help to mitigate the risk and ensure that Express Coffee is able to work on its strengths and use the different opportunities to grow its business. 4. operational plan 1.12. Key Business Objectives Express Coffee has looked clearly stating the objectives which they look to pursue in their business venture. The coffee player has looked towards different inputs and has looked towards developing their business in such a manner that they are able to clearly define the path that the business looks to follow so that they are able to achieve their objectives. This has made Express Coffee to identify the following business objectives Develop their business model so that they are able to provide quality services to its customers which will ensure maximum customer satisfaction and will help to multiply the joy which people get through coffee and having other facilities provided along with it (Chew, Cheng & Petrovic-Lazarevic, 2006) To ensure that the venture is profitable over a period of time and provides the business the required opportunity which helps to penetrate the market better Ensure maximum customer satisfaction by hiring the best available talent and ensure proper delivery of services at the fastest time possible so that customers remain loyal to the coffee player 1. Implementation Strategy Express Coffee has looked towards identifying a time line and look towards ensuring a proper strategy which will help them to ensure that they are able to move in the correct direction. Express Coffee has looked towards identifying a time line which will ensure that they are able to provide services based on it. Further, the coffee player has also ensured that they look towards a pattern which will help them to evaluate the manner they have performed and make timely changes so that the business benefits over a longer period of time Task 1st Month 2nd Month 3rd Month 4th Month 5th Month 6th Month Choosing Location √ Legal Formalities √ √ Hiring of Staff √ √ √ Advertising √ √ √ Express Coffee √ The above chart highlights that Express Coffee has looked into different factors and based on it have looked towards designing their strategies so that they are able to provide proper services to its customers. Further, Express Coffee has also ensured that the time line has been planned in such a manner that it provides the business the required time to make changes and ensure that the business is able to take correct decisions and make timely changes so that the entire business benefits. 1.13. Marketing This section looks to present the manner in which Express Coffee is looking towards marketing strategies and will help to understand the different directions that the business needs to work on so that they are able to ensure better services and will thereby transform into better services 2. Market Research Express Coffee has looked towards conducting a marketing research so that it can find the different opportunities that the business has. Express Coffee has looked towards understanding the profile of the customers and has looked towards conducting the marketing research which provides valuable inputs regarding the increasing demand for coffee and other consumable products in the universities (Coughlan, Stern &Ansary, 2006). The research highlights that students are looking towards fast services which increases the chances of Express Coffee succeeding in their venture as being able to provide the customers with the quality service that they are looking for will ensure that the product is easily accepted by the people and will create a market where they can look to work on. 3. Positioning in the Market Express Coffee looks towards positioning itself in the niche market. The company aims to provide coffee and related products to students in universities and campuses in China due to the widespread demand for coffee and ready to eat fast food. This will help them to ensure that they are able to target a different segment of the niche market and their product is aimed at people belonging to a different field. This will also help to reduce the amount of competition that Express Coffee has to face and will help them to serve in the niche market Further, Express Coffee has also ensured that they have a unique selling proposition which differentiates it from other players in the market. On this front Express Coffee has looked towards marking down how many times does the consumer has been drinking the coffee into their cup, for example, a customers come in and want to get a cup of latte, the staff will make a coffee and after that the staff will write down a number like 3 or 4 times on the cup, so it will show that to customers how many times did they drink the coffee per day or per week. Express Coffee thereby has looked towards using cup which is made of special material instead of paper so that it can be reused and at the same time it is eco friendly. Thus, Express Coffee has identified an unique selling proposition for itself which will help them to ensure better pricing strategy and ensure a different market for its products. 4. Pricing Strategy Express Coffee will set an economy prices that every students from university could afford it, because Express Coffee not aiming for luxury or high income consumer, it’s just for the student, staff and local area consumers. The company has also looked into the fact that since the business has to incur little expenditure on marketing and operational activities the prices have been kept low. Further, Express Coffee has also looked towards understanding the disposable income that the students have and based on it has looked towards identifying their pricing strategy. This has made Express Coffee to ensure that the prices of coffee is kept low which will ensure that they are able to target the correct section of the society and will ensure maximum opportunity of growth for the business (Phillip & Gary, 2001). 5. Target Market Express Coffee based on the positioning and pricing strategy has looked towards identifying the potential customers they are aiming at. Since, Express Coffee looks towards providing coffee to its customers with quality services it has looked towards ensuring that they identify the correct market (Bangs, 2002). This has helped Express Coffee to identify their target market as students, staff and local area consumers. This has helped Express Coffee to identify the target market as being mainly students studying in universities and campuses along with the staff members who provide the required training to the people. This has helped to identify the target market as Customers Aimed at Age Group Classification of purchaser Purchaser Requirements Students 15-25 Students Offer coffee at competitive rate Staff 15-45 Employees Offer coffee at competitive rate Local Area 25-45 Married & Singles Offer coffee at competitive rate Thus, Express Coffee has looked towards identifying the target market which will help them to pursue their strategies accordingly so that customer satisfaction maximizes. 6. Distribution Express Coffee has looked towards ensuring that they provide quality service for its customer due to which they have ensured proper distribution. Express Coffee looks towards providing coffee to its customers from the store itself. The company has ensured that they have different employees who cater to the need of the customers but the business has been entirely governed and designed to ensure that the products directly reach the consumer (Robin & Susan, 2003) This has reduced the dependency on the distribution network but Express Coffee needs to ensure proper relations with the suppliers so that coffee beans and other consumable products are readily available at the correct time and is fresh as well. Further, Express Coffee has also looked towards ensuring that they have a proper strategy where the products are offered fresh and timing is maintained so that consumers are able to get the products at a minimum cost. 7. Promotional Strategy To promote the business “Express Coffee”, coffee shop will try to use the cheaper cost of promotion idea as the new business just started. Express Coffee could make a poster that tag into university notice board, so that when students or staff walk pass they could see that Express Coffee has been open and it right next to the university corner. Color is very important for the poster as well; it’s better use some bright color so that could make it more noticeable. The other way to promote Express Coffee is to advertise on the local newspaper, this could help to promote Express Coffee as well. Express Coffee has laid emphasis on customer satisfaction and promoting its store through word of mouth which has thereby ensured that they look towards promoting their services in a manner that it helps to ensure maximum opportunity of growth for the business. 8. Sales Targets Express Coffee looks towards selling coffee to its students and has thereby looked towards ensuring that each customers atleast drinks a cup of coffee on an average in a week. This will ensure that Express Coffee is able to cover its cost and will ensure that the targeted figures are under control (Cateora, Mary & Graham, 2009). Also, looking towards having a target will ensure that the workforce works in the desired direction and provides the required opportunity through which the business grows. 1.14. Financial Plan Express Coffee has looked towards ascertaining the financials that the company will be looking to incur in their venture. The financial looks to present the manner the coffee chain is looking to get the finance and the manner the business looks to generate revenue over a period of time. This also looks into different aspect of the business which helps to determine the manner in which Express Coffee is looking towards the future to ensure proper growth for the business. 9. Start-up Capital Express Coffee has looked towards identifying the manner in which the business will be financed. The management has looked towards getting the required loan from different sources. Express Coffee has looked towards ensuring that the source of fund for the start of the business will be available from bank loans, venture capital and individual contribution for a balance in its risk mitigation techniques. Efforts have been made to ensure that the major capital is contributed by venture capitalist and bank loan. The percentage value is represented below 10. Assessment of Financial Viability of Proposed Business Express Coffee has looked towards identifying the manner in which the business will be able to earn revenue and has also looked into different areas which will ensure that the business is able to fetch a higher return. The break even analysis suggest that Express Coffee will be able to achieve break even in 24 months which is a sound time as it will ensure that the business is able to provide the required returns. This is shown below The above graph depicts that the business will be able to achieve beak even quickly which will ensure that the stakeholders get a proper return on the sum invested which is shown below Break Even Analysis Cost Description Fixed Cost Variable Cost (%) of fixed cost Variable Cost     Employees & Chef   10% Other Services   3% Fixed Cost     Development of Coffee shop 35,235   Capital Expenditure 28,000   Promotion 5,000   Recruitment 12,000   Other Expenses 8,700   Taxes 2,907   Total Fixed Cost 91,842   Total Variable Cost   13% Breakeven Sales Analysis 103,782   11. Profit and Loss Express Coffee will be able to ensure that they earn profits over a period of time because of the business model followd by them. The profit and loss for the organization is highlighted below Sales Forecast (3 years)   Year 1 Year 2 Year 3 Revenue from Coffee Business $118,000     Revenue from Coffee Business   $148,000   Revenue from Coffee Business     203,000 Other:       Revenue from other products   $12,000 $27,000 Total Revenues $118,000 $160,000 $230,000 Expenses       Development of Restaurant 35,235 21,000 18,000 Capital Expenditure 28,000 24,000 21,500 Promotion 5,000 13,000 19,000 Recruitment 12,000 23,000 29,000 Other Expenses 8,700 10,500 12,200 Total Expenses 88,935 91,500 99,700 Profit Before Tax $29,065 $68,500 $130,300 Income tax (10%) $2,906.50 $6,850.00 $13,030.00 Profit after tax $26,158.50 $61,650.00 $117,270.00 The above chart shows that Express Coffee is able to ensure profits which will help the business to ensure proper return to its investors 12. Balance Sheet The balance sheet for Express Coffee thereby looks to have different assets and liabilities and is as the business looks towards ensuring that they use the facilities in the university while conducting their business. This has thereby ensured that the business is able to grow and ensure proper use of different assets and liabilities in generating revenues for the business. References Bangs, D. 2002. The market planning guide: creating a plan to successfully market your business, product, or service, Sixth Illustrated edition, Kaplan Publishing Coughlan, A., Stern, W. & Adl Ansary, E. 2006. Marketing Channels, 7e, ISBN 9780131913462 ISBN 10:0131913468 , Pearson Education Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, 2006. Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, Vol. 2, No. 1 Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill. Khoury, S.J. 2004. Countertrade: Forms, Motives, Pitfalls and Negotiation Requisites. Journal of Business Research, 12, pp 257-270 Korey, G. 2006. Multilateral Perspectives in International Marketing Dynamics. European Journal of Marketing, 20 (7), pp 34-42 Krasnikov, A. and Jayachandran, S. 2008. The relative impact of marketing, research and development, and operational capabilities on firms performance, Journal of Marketing, 72 (4) Phillip, K. & Gary. A. 2001. Principles of Marketing, 9th ed. Upper Saddle River, NJ: Prentice Hall, p.245 Robin & Susan, 2003. In search of Strategic Management Accounting. Social science Research Network, 14 (3), 29-37 APPENDIX 1 – CURRICULUM VITAE OF PROPRIETORS In addition to the CV it is also useful to include a skills assessment of each of the key personnel. Skills Category Grading of Skills Underdeveloped Well Developed List of relevant skill categories 1 2 3 4 5 Leadership X Motivation X Team Building X Communication X N/A APPENDIX 2 – SWOT ANALYSIS STRENGTHS WEAKNESSES Increased demand for coffee Students preferring faster service Different variants of coffee which is less harmful Untested in the universities Rising concern towards obesity No brand name OPPORTUNITIES THREATS Increasing students base Increasing demand for coffee Obesity Other players working on the same model Read More