Business Plan for New Company near the UEL Campus - Case Study Example

?Running Head: DISCOVERING ENTREPRENEURSHIP Discovering Entrepreneurship [The of the will appear here] [The of the will appear here] [The name of the Professor] [Course] Executive Summary The growing number of international students in the University of East London presents the offer of opening up a shop that caters to the nutrition needs of these students in accordance with their local taste. A growing number of shop and supermarkets cater to this need but they are not within the easy reach of these students and usually over a limited range of products. The purpose of the business plan is to use the opportunity in connection with the dependence of the Generation Y on the internet and social networking websites. Introduction The report deals with developing a business plan that shows the potential of a new company on or near by the UEL campus. It is also a good opportunity for the project group to expand knowledge and skills to be a good entrepreneur in the future. During the project the five main characteristics of a successful entrepreneur were kept: believe that you can make a difference, take action, be optimistic, tolerance towards ideas and be ethical (Bronson, 2011). The new company is been developed as a response to the growing number of international students in the campus who wish to enjoy food from their own culture. With the increase number of students from different cultures and the demand for product diversity, comes the question: “Do students from other countries like English food offered in vicinity of UEL campus?” There are over 4.000 international students studying at the University of East London (University of East London 2011). This fact gave the inspiration for this new business idea. International students might not enjoy English food and miss food from their home country. When the food is available in the UK the international students can have difficulties to find it. The store cannot fulfil the needs of all international students. That is why it will focus on the majority. There are a few characteristics about the international students: Age from 18 years old Study fulltime or part-time at the UEL Home country: India, Nigeria, Sri-Lanka, Bangladesh The business idea is a store which sells food that international students miss from their home country and cannot purchase locally. While there are other stores that offer the same product, the business plan aims to create a shop within the vicinity of UEL so that students do not have to travel long distances. Also the range of products in this shop would be more as compared to the competitors. Internet would also be used in conjunction with the shop so that students can order online also. The company will be opened in the name of Oriental Bazaar. Oriental Bazaar will provide the international students their specific nourishment need. More specific information and research is elsewhere in this business plan. The business plan will include: conceptualisation, target market, supply chain, product life cycle, marketing strategy, marketing mix, operational plan and capital requirement. Macro environment Analyzing the macro environment is imperative in order to analyze how the business would fare in the current business environment. The most commonly employed to study the macro environment is the PESTEL analysis (Gillespie, 2007) that is as follows: Economic environment: University students usually have a limited budget and are not willing to pay extra for their food stuff. They usually look for discounts. However, bulk buying is not an option for these students as they do not have to serve the entire family and the purchasing is only meant for one person or occasionally a group of people. Political-legal environment: The Political-Legal environment that should be studied in this respect would be that of the University of East London. The shop would be required to maintain the codes determined by the university. UEL is committed to providing the right direction to emerging business and especially ones developed within its own community. The Knowledge Dock of UEL ‘connects students to business opportunities, enable entrepreneurs to make the right connection to start their business’ (UEL, 2011b). Thus UEL’s political and legal environment is favourable for this shop. However, we have to understand that the growing unrest due to the increasing racial episodes may create political problems for the shop. Socio-cultural environment: The University of East London comprises of a large number of international students as statistics reveal that more than 4000 students currently studying in the university are from outside the UK. The number is divided in the following ratio: 1250 Indians, 550 Africans, 400 Nigerian, 360 Sri Lankan, 285 Bangladeshis and 200 Pakistanis. Technological environment: University students depend heavily on technology. They are usually connected to the world through their desktops, laptops, PDAs, cell phones and other communication devices. Technology is also used as a medium to shop online or make purchasing decision through the help of friends. Thus technology will provide a suitable advertising medium and quite possibly a selling platform. Physical environment: They physical environment selected for this shop is the university itself thus we will discuss whether the physical environment provided by the university is conducive to the Oriental Bazaar. At this time, the university does not feature any other shop selling international food and thus Oriental Bazaar has the advantage of developing a monopoly. The shop will be created in the vicinity of other food related shops such as the Restaurant and Cafe Bar so that students are provided with an alternate option for their nutrition needs. Demographic environment: The target market for the Oriental Bazaar is international students that study at UEL. UEL comprises of more than 4000 students that fall under this category. While they form the primary target market for the shop, the secondary target market includes all the university students who wish to try out something new or ethic. International students will continue to be enrolled in UEL on account of its diversity policy in allowing students to enter into the university. Also London is a city with a large number of international people and the children of these people will enter into the university at one time or another and thus will keep on replenishing the target market for the Oriental Bazaar. Micro environment Customers: Survey The following questionnaire was prepared to understand the current needs of the customers and get an insight on the customers: Questionnaire This questionnaire is part of our research for opening a store which sells food that international students miss from their home country and cannot purchase locally. The store will be based on the UEL campus or nearby vicinity. 1 What country and region are you from? 2 Do you know where to purchase food and drinks from your country nearby university grounds? Yes No 3 Are you able to find food locally that satisfies your dietary needs? Please circle bearing in mind that 1 = low and 5 = high. Breakfasts 1 2 3 4 5 Confectionary / Snacks 1 2 3 4 5 Lunch 1 2 3 4 5 Hot drinks 1 2 3 4 5 Cold drinks 1 2 3 4 5 Diner 1 2 3 4 5 4 If you have scored any of the above with 3 or less, please indicate below What products you would want to buy. a) ............................................................................................................... b) ............................................................................................................... c) ............................................................................................................... 5 Are you prepared to pay a premium in order to satisfy your needs in terms of buying food and drinks from our shop? Yes No 6 Please name five types of favourite food from your country, which is not available for you to buy locally. d) ............................................................................................................... e) ............................................................................................................... f) ............................................................................................................... g) ............................................................................................................... h) ............................................................................................................... 7 Please name five types of favourite drinks from your country, which is not available for you to buy locally. a) ............................................................................................................... b) ............................................................................................................... c) ............................................................................................................... d) ............................................................................................................... e) ............................................................................................................... 9 Name five favourite food brands from you country (if any) a) ............................................................................................................... b) ............................................................................................................... c) ............................................................................................................... d) ............................................................................................................... e) ............................................................................................................... Competitors The main competition for the shop is a small off-license shop that operates in East London. However, this shop is a small shop with a limited range of only Asian products. Also the shop is not located in the vicinity of the University of East London and thus students have to travel a long distance in order to buy products from the shop. However, this shop has developed a reputation for itself which would be difficult to compete with in the beginning Other important competition for the business includes supermarkets such as Asda and Tesco. These supermarkets offer a range of international products at a competitive price. However, these supermarkets are located at a good travelling distance from the university and students are limited in their reach to such supermarkets. Suppliers The suppliers that would be selected for this business are warehouses that are located within UK. These suppliers import food stuff from foreign countries and sell them to retailers and shops after stocking them in their warehouses. For this business, a number of suppliers would be contacted in order to get a good price and to provide a good range of products to the customers. A number of suppliers have been shortlisted through the prices and products that they offer. These include Alasia, B K Whalley, Bespoke Foods, Brindisa and Caviar House Distribution. Intermediaries The number of intermediaries will be kept to the minimum. This important so as to ensure that food quality is not affected and the prices of the products are kept low. The greater the number of intermediaries, the higher would be the final cost of the product (Bowersox, Closs and Cooper, 2008). University Students usually have a limited budget and cannot afford to spend a high amount on food stuff. They are willing to travel long distance by bus if the food prices are low in other stores. For this reason, intermediaries would be removed. Products would directly be brought from the suppliers that are the wholesalers. Swot analysis Strengths The biggest strength of the business is the diverse range of products being available to the customers. At this point, only a number of international students are being catered which includes Chinese and Indian. The Oriental Bazaar would serve a large number of cultures with a diverse food range. Also consumer insight would be easier to grasp as university students are more willing to fill out survey forms that improve the service of their favourite shops. Weaknesses One possible weakness for this business is the financial constraints placed on the business since the business is new and developed by young university students who do not have enough capital to develop a big business. Also being new in the business would require some time to bring in customers and develop customer loyalty. The business would incur loss in the initial period for which enough capital would have to be attained. Opportunities One possible opportunity for the business is the location of the shop inside or in the vicinity of the university. The shop would be able to benefit from the large number of international students living in the area. Also the age group of the primary target market falls within 18 to 25 years which is a time when the young are still developing their tastes. They want to experiment with new products and take suggestion from their friends. The primary target would thus also bring secondary target market that would be local students who want a taste of the foreign food. Another opportunity is the limited range of competition for the business and the location of the competition. The competition for Oriental Bazaar is located far away and is not within the easy reach of the primary target market. This will allow Oriental Bazaar to develop its monopoly not only through the limited competition but also through the wide range of products offered. Technology is another opportunity for the business. The primary target market which is the Generation Y is addicted to the internet, social networking sites and even online shopping. This will allow for an easier way to reach the target market. Threats One threat to the business is the competition faced by the large supermarkets such as Tesco and Asda. These supermarkets provide food stuff at a heavily discounted price which places price constraints on the product of the new company. These supermarkets buy in bulk quantities and thus they are able to offer low prices to the customers. Students, being on a limited budget, are willing to travel long distances if the prices offered by the competition is discounted. Business model The USP for the business is to provide a wide range of international food to international students within the vicinity of the university at competitive prices. This will allow the business to capture a large customer base since international university students in UEL will be able avail a good range of products without having to travel long distances. Also the wide range of products would not only serve limited international students such as the Indian or the Chinese but students from different ethnic background. Appropriate technology would also be used in order to market and sell the products. The primary cost drivers for the shop would include the cost of the products; transportation and packaging of the products; the installation and maintenance of the shops; the wages of the part time labour employed for working the shop; promotional material and the cost for developing and uploading the website for the business. The initial capital for starting the business will be collected from the joint saving pool of the founder of the business. The rest of the capital will be attained from investors who have been contacted will the initial plan and they are willing to invest in the venture. Marketing The Product being offered by the Oriental Bazaar would include a range of international products including Indian spices, Chinese noodles etc. These products would be imported from their original country and sold at our Oriental Bazaar. The main attraction of this shop is the diverse range of products available. At this point, such shops are offering a limited range of products. The range of products available in the shop will be competitively priced. Since London is a mix of people with different cultures and countries, international products are easily available to the population. Thus, in order to compete with other such businesses, the products have to be priced competitively. Also since the shop will aim to target university students, we need to understand that the prices cannot be too high that students would be unable to afford them or thus consider the competitor’s products. A survey conducted on food demands revealed that the consumers focus on three main factors when making a buying decision regarding food. This included food safety, animal protection and also the price of the product (Appleby, Cutler, Gazzard, Goddard and Milne, 2003). The shop will be opened within the campus of the University of East London or within its vicinity. The idea of opening a shop in the location is to cater to the growing number of international students studying and living in the campus. The suppliers for the products sold in the shop would be the warehouses located in London that sell international products to other such shops. Promotion for the product will be done mostly through the online medium, with the focus on social networking sites such as Facebook and twitter. Since a large number of students access the internet of daily basis and mostly spend their times on social networking sites, it would be the best option for the shop. Another medium of promotion would be through word-of-mouth. Word-of-mouth promotion has become most effective for the Generation Y as they have become cynical towards the traditional mediums of advertising and would most likely depend on their classmates and friends to guide their buying decisions. Promotion will also be done within the store and through flyers distributed around the university campus. The personnel required for the shop would basically be non-technical. The shop staff could be hired from within the university and it would be increasingly better if the staff belong to a minority that is being catered as our target market such as an Indian or a Korean. Part-time staff would be the best option for the shop at this point of time. The reason for preferring an Indian or a Korean would be that customers would find it easier to communicate their needs since the personnel would be aware of the different names and nature of the products being offered. These personnel would also help in providing insight about the target market when needed such as their buying preferences, psyche etc. Strategy The principle strategy is to create a store by the name of Oriental Bazaar that sells international food to students living in the campus of UEL. The wide range of products available at competitive prices in the immediate vicinity will help bring in the initial customers. Once customers are developed, a website would be developed. This website would allow students to buy their food stuff online without having to go to the shop physically. Since university students are connected to the internet almost all the time, they would benefit from shopping online. They would not have to waste precious time in going and making the purchases. Also they can make the purchases by taking their own time. The strategy would be to allow students to create free accounts and pay for their purchases at the time of delivery. In order to bring the customers to buy for the first time, discount coupons would be sent to their email addresses. It is quite difficult for students to not to avail any discount coupons and thus they would make the necessary purchases. This will be done to make them used to the online purchasing environment. Also customers who have not made any purchases in a long time would be sent discount coupons so that they are tempted to consider purchasing online. The main strategy would be to focus on internet shopping so as to reduce the overhead costs of the business that would otherwise be incurred in maintaining the physical shop. Management team The key players of the business would mostly be the founding members of the business. This would consist of a small group of three people. The first member would be the shop manager. As a shop manager, the member would be responsible for not only looking over the shop but also looking after the online web portal. The shop manager would be concerned with dealing with the customers basically and thus customer relation is something he would focus on. The next member would be the supply chain manager. The supply chain manager would be responsible for the stock of the products and maintaining the inventory. The supply chain manager has to ensure that the best products at the best prices are being brought by the store. The supply chain manager would also be responsible to keeping a check on the suppliers and exploring other suppliers if the current suppliers are not feasible. The third member of the group would be the book keeper. The book keeper would ensure that the accounts are kept in order and that the costs are not greater than the profit of the business. The responsibility of the book keeper is also to arrange for capital if the store runs any deficient. In addition to these founding members, a small number of people will be recruited for the diverse functions of the shop. They would include sales assistant, delivery men, website assistant etc. Finance The investment for the shop would be small in size. The idea is to create a small business that is able to remain in business using a limited investment. Since the size of the shop would be small, maintenance and installations costs would also be limited. The business would not stock inventory since it would require additional investment in terms of not just space but also capital required to buy these quantities. The use of the website as a selling platform would further reduce costs for the building. The initial investment of the business would be used in setting up the shop. A physical presence is necessary for a business in order to develop trust within the customers and to create a brand identity. The profits of the initial investments would later be used to develop a website and a good user interface to allow customers to shop conveniently over the internet. Conclusion At this stage, the business model is in its initializing space. The management at the UEL have given the go ahead for the development of a commercial shop within their premises. They have agreed to support the business in the best of their abilities which is a positive sign for the Oriental Bazaar. At this moment, potential investors are being contacted in order to finance the shop and allow the shop to develop a good presence in the minds of the potential customers. The response is positive in many cases and soon enough investment would be attained to being the business. The next step is to contact suppliers for the business. A number of suppliers have been shortlisted but they will have to be contacted in order to determine the price and quantity of the products. A contract will also have to be maintained. Also in order to furbish the shop according to the needs of the business, workers would have to be contacted. A designer would be hired who would create good brand identity for the shop and possibly develop a website later on. Risks of the business will be minimized by beginning on a low scale and expanding according to the demands and needs of the customers. References Appleby, M. C., Cutler, N., Gazzard, J., Goddard, P. and Milne, J. A. (2003) What Price Cheap Food? Journal of Agricultural and Environmental Ethics, Vol. 16, Issue 4 Bowersox, D. J., Closs, D. J. And Cooper, M. B. (2008) Supply Chain Logistics Management, Michigan: Michigan State University Branson, R. (2011) Business Stripped Bare: Adventures of a Global Entrepreneur, USA: Penguin Group Gillespie, A. (2007) Foundations of Economics, London: Oxford University Press University of East London (2011 a) Why choose UEL? Available at: http://www.uel.ac.uk/international/welcome/why.htm (Accessed 26 October 2011) University of East London (2011 b) Business Services at UEL Available at: http://www.uel.ac.uk/business-services/ (Accessed 17 November 2011) Yarrow, K. and O’Donnell, J. (2009) Gen buY: how tweens, teens, and twenty-somethings are revolutionizing retail, California: Jossey-Bass Read More