A Business Opportunity Analysis of a New International Business Venture is an Interfresh Limited - Case Study Example

and Section # of A BUSINESS OPPORTUNITY ANALYSIS OF A NEW INTERNATIONAL BUSINESS VENTURE THE FIRM MIGHT UNDERTAKE Company Background The company which has introduced the sports caf is called Interfresh Ltd. The company is located in Harare, Zimbabwe. Interfresh Limited is in the business of producing, processing and marketing agricultural, horticultural, agro-industrial and allied food products in both the local and export markets. Opening up of the sports caf means total market diversification for the company, since it has never dealt with such a business before. Therefore, the sports caf is one of the endeavors of the Interfresh Ltd Company to provide entertainment to the customers along with great food service and a themed aura. The Plan Itself The new service plan is that of the sports caf where football matches will be telecasted. The premises of the caf, the uniform of the attendants and the menu will speak out the theme clearly and loudly. The target marketing has revealed a niche audience with love for football. The company introducing the service is Interfresh Ltd - entertainment unlimited. The environment, even though it is going through recession, is favoring the opening of a sports caf. The SWOT analysis has highlighted that the caf has the opportunity of playing many other sports when it reaches the maturity stage and thus extending its maturity. The marketing objectives are that of awareness and creating and keeping profitable customers for the life of the caf. The marketing strategies will involve above-the-line and below-the-line marketing activities. Marketing Objectives of the Chosen Service The marketing objectives for the sports caf are that of awareness of the caf and the special characteristics that it possesses. Whether it is above-the-line or below-the-line marketing activities, both are used to ensure that awareness is spread and excitement is generated within people. Therefore, marketing strategies are formed in ways which will fulfill the marketing objectives, given the budget that was decided. The marketing strategies encompass creating customers, keeping customers and ensuring that customers are profitable. (George, 1981) Target Customers The intended target market is the football lovers. These people are in huge numbers and are especially prominent when the football season is going on. Huge numbers of people go crazy when football world cup starts, choosing teams to hoot for and players to die for. Service Positioning In the Market The product positioning is that of a very informal, casual caf, where along with great food, the customers will get unlimited entertainment, where they will be able to watch sports at all times. Thus, such positioning is bound to make a permanent place in the minds of the consumers. COMPARATIVE ADVANTAGES UNDERLYING THE OPPORTUNITY The opportunity of opening up a sports caf has a comparative advantage for the company. The company is based in Zimbabwe, where the people are not too fond of sports as compared to people in other parts of the world. Thus, opening this business for another target market in some other country where people have a passion for sports is one of the comparative advantages that the opportunity has for the company Interfresh Ltd. COMPARISON OF THE POTENTIAL MARKET SIZE The customers are niche market that is those people who love football and who visit the caf for the prime purpose of watching the match in the caf. The market size is considerably high and the growth in the market is good as well because many children each year grow big enough to understand the game of football and becoming football crazy, thus enlarging the target market of the caf. ESTIMATED START-UP COSTS Costs There needs to be 20 attendants in the caf, all dressed in football gear or wearing the shirts of famous football players. The major costs of the caf will be the design and making of this gear as well as the periodic maintenance of this gear so that it looks new and fresh whenever a customer visits the caf. The setting up of the theme of the caf within its premises as well as the design and printing of the menu books are one time investments and will be called fixed costs. As far as variable costs are considered, they will be the amount that will be used in the making of the food that will be ordered, the amount that will be spent in getting the copyrights of the matches that will be telecasted and the costs of the electricity that will be spent in playing the projector and the multimedia to telecast the matches. Other costs would be the costs spent on marketing the product, making the telephone calls, sending the mails etc. (Gilligan, 2005) Revenue The approximate revenue for the first year of operations of the sports caf is $50,000. This revenue has been generated by rightly calculating that per person entry for the sports caf will generate a fixed revenue of at least $5 (fixed entry costs) and $7 (the minimum cost for any main course) + $3 (for any other thing that the customer orders) will be equal to $15. It is then assumed that at least 10 football lovers will walk in the sports caf in any given day. Therefore, $15 multiplied by 10 will give $150. $150 multiplied by 360 will give $54000, which has been rounded down to give a figure in tens of thousands that is $50000. The figure that has been estimated in that of the least amount of revenue that can be generated. If the caf does well and positive word of mouth spreads, then there is no limit as to the amount of revenue that can be generated. The seating capacity of the sports caf is that of 70 people at one time, therefore, the upper limit can be quite high. But since the first year of operations will not be generating much of consumers coming, the estimates have been kept quite low. Marketing Budget The approximate revenue for the first year of operations of the sports caf is $50,000. This revenue has been generated by rightly calculating that per person entry for the sports caf will generate a fixed revenue of at least $5 (fixed entry costs) and $7 (the minimum cost for any main course) + $3 (for any other thing that the customer orders) will be equal to $15. It is then assumed that at least 10 football lovers will walk in the sports caf in any given day. Therefore, $15 multiplied by 10 will give $150. $150 multiplied by 360 will give $54000, which has been rounded down to give a figure in tens of thousands that is $50000. The figure that has been estimated is that of the least amount of revenue that can be generated. If the caf does well and positive word of mouth spreads, then there is no limit as to the amount of revenue that can be generated. The seating capacity of the sports caf is that of 70 people at one time, therefore, the upper limit can be quite high. But since the first year of operations will not be generating much of consumers coming, the estimates have been kept quite low. (Kotler, 1988) There needs to be 20 attendants in the caf, all dressed in football gear or wearing the shirts of famous football players. The major costs of the caf will be the design and making of this gear as well as the periodic maintenance of this gear so that it looks new and fresh whenever a customer visits the caf. The training requirements will be a 5 day workshop in which staff will be trained to serve well while being dressed up in the heavy football gear. Other factors like using football phrases while addressing customers will also be taught. The staffing costs would be $150/ month pay to each attendant. This will total up to $3000/ month costs for the staff. Pay for the managers have not been included in this estimate which will be around $500. There will be around 5 managers. RISKS The limitations to growth may be implied by many structural elements of the service. For instance, competitors can rise in this very niche that the sports caf has found for itself. Other sports caf can be opened to cater to the same target market, thus limiting the growth that is possible for this sports caf. Other limitations to growth can be the seasonal fluctuations that can take place in terms of when the football season is on and when it is not. In vacations like Christmas, Thanksgiving, the people are busy in meeting up with their family and friends and therefore the business of the caf would suffer since no one would have time to watch telecast of football matches. Technology has been the basic component in facilitating this service delivery. This can be said because a projector and a multimedia - both of them fall under technology - have been used to make this service possible in the first place. The basic service is that of telecasting the football match and this can be only done through this technology. The caf is promising the feel of a stadium and technology makes this happen. If the technology refuses to cooperate with the caf, then telecasting the matches on time would become an issue and this will harm the goodwill of the organization. Technology can always give way, due to any kind of technical fault or short circuit can happen due to mistakes in wiring, which can lead to the downfall of the whole system. (Friedman, 1994) Another major risk associated with this sports caf is its acceptability in the international business arena. If this business is taken on a global scale, it is possible that some cultures would not be too fond of sports, especially football, and the whole business plan would backfire, since the socio-cultural environment of that location does not accept such an idea. AN ENVIRONMENTAL ANALYSIS INCORPORATING THE ECONOMIC, POLITICAL, SOCIAL AND CULTURAL ENVIRONMENT Environment consists of the surroundings within which every organization operates. The world is going through tremendous changes, such changes whose impact is very far-reaching and powerful. And thus, organizations cannot operate in isolation. The environment has made them interdependent with other factors and dependent on other units within the environment. (Rayner, 2005) Every organization comes face to face with two types of environment: the external environment and the internal environment. The external environment is that environment which is outside the boundaries of the organization. But nevertheless, it affects the organization through its activities and happenings. The external environment can be further sub divides into the general environment and the task environment. The general environment is that part which affects the organization indirectly. Whereas, the task environment is that part which affects the organizations workings and productivity in a direct way. The general environment has various dimensions, like that of international, technological, socio-cultural, economic, and legal-political. Various changes in these dimensions are highly likely to affect how the company operates. (Buchanan, 2007) When it comes to recession, a lot of changes have resulted in the above mentioned dimensions. In the international dimension, the financial crisis has hit the whole globe, thus leading to a shortage of funds all around the world. The technological dimension has not been affected much since it has become more of a necessity than a luxury and thus cutting down on technology has not been made much due to recession. The socio-cultural dimension has altered since people are now cutting down on luxury items, holiday trips and other extravaganzas of life that they used to enjoy. Simple living is the talk of the day. The economic dimension is in a very messy position since the financial crisis has strained the economies of almost every country in the world, especially the big giants. And lastly, the legal-political dimension has changed so as to inculcate the financial crisis. Tax laws have changed; labor unions are concerned about getting laid off. Thus, recession has affected almost every dimension of the general environment. (Watson, 2005) The task environment consists of the groups of people with whom the organization is interacting on a regular basis. This includes the customers, the competitors, the suppliers, as well as the labor market. A common mistake is to assume that the labor market is equivalent to the employees who are working at the organization. This is not so. The labor market consists of those people whom the organization can hire, they are the potential employees. Recession has also affected these groups of people. The customers are now choosier about what to buy and want the greatest value for their money. Employees have a fear of getting laid off by the company. And suppliers now have less bargaining power as compared to their clients since clients are cutting down on production and sales. (Farnham, 2005) S.W.O.T ANALYSIS The SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is important before starting any service or launching a product. In the case of the sports caf, the strength will be the application of the theme football in the premises, marketing and uniform of the attendants, which will create that unique aura not available anywhere else. The weakness will be the many factors that will be involved when it comes to maintenance, control and bound to be properly done if success is needed. The opportunity will be the many other sports that can be telecasted by the sports caf. For instance, the craze for cricket exists since time immemorial. Moreover, the elder generation would even enjoy a quite game of golf being telecasted. Therefore, all these sports present great opportunities for the sports caf. As far as threats are concerned, there are competitions like the stadium itself where the match is being played and the millions of television screens that almost reside in every home in the city, where these matches can be seen as an alternative. (Clarke, 2000) FIRMS MAJOR POTENTIAL COMPETITORS The competitive environment for the caf in its very own industry is very few. The caf that is being opened can be said to targeting a very niche consumer market. Therefore, competitors who have opened similar sports caf for telecasting football matches only will be almost zilch. Nevertheless, there are other sources from where the football lovers can watch football matches. The first is the stadium itself, which gives the audience the whole match live and in person. Others are the televisions present in every home and the regular cafes which just play the sports channel whenever any important football match is being played. STRATEGIES Product The service that can be introduced can provide of a restaurant in the form of a sports caf where only football would be broadcasted. This would be a specialized restaurant which would provide the feel of a stadium to the customers who wish to enjoy great food in an environment of a stadium, cheering for their own team. The restaurant would be specializing in serving food according to the requirements of the theme and special attention would be given to food related to the game such as hot dogs, fries etc. Also, the dishes that would be served would be inspired by the teams and the players to add that little touch to the theme. The restaurant would also be hosting a request based system, that is, on days when no football match would be being played, the restaurant would put up recordings of historic epic sporting events that the customers would want to see again and again. Also, the restaurant could be booked for theme based parties etc, hence making it a perfect choice for football lovers. Price The price is one of the most important factors in the marketing mix. The pricing decision affects so many other factors like profit, volume, revenue etc. Price is the only marketing mix that generates income; otherwise all the other components generate costs. So it is one of the most vital decisions to set the right price. When a company "adds value" to its other three components of the marketing mix, this is reflected in the price of the product/service. In the case of the sports caf, if the product is unique and well designed, has been marketed well and has a strategic location, it can be fairly priced high. (Pinson, 2001) The pricing objectives of the sports caf are income-related, as opposed to other objectives that are possible like volume-related, competition-based or societal objectives. The caf can move up-market, that is, there will be few customers but still high income because the customers who are visiting are ready to pay the high price. Focusing on income-related objectives for establishing price is also important for the caf since it has invested highly in setting up the theme of the football in almost every aspect of the caf. The company needs to recover this investment. (McGukin, 2005) The entry to the caf will be $5 fixed which will entitle the customer to a free drink and watching the game. A main course has to be ordered by the customer after he is in. the main courses will range from $7 and onwards. This price can be fairly called a high price and is justified because of the strategic location of the caf, the uniquely designed product and the high marketing that has been done to promote the caf. Promotion The communication objectives for the sports caf are that of awareness of the caf and once the caf gets started, positive word of mouth by those who come to the caf. Among the two factors, the first two will be dealt with through marketing strategies, whether it is above-the-line or below-the-line marketing activities. Word of mouth will be positive and will spread itself once the customer goes through a successful "service encounter" brought about by the cohesion of the backstage and the front stage. The contact personnel at the caf will be calling the customers and random people in general to inform them about the caf and the date and time for the telecast of a specific match. The contact information of the customers will be asked from them once they come to the caf and will be stored in a customer database. (Birn, 2002) The major marketing strategy that will be used will be that of direct marketing. Direct marketing is one of the accountable ways of promoting a service. This form of promotion and marketing adds value to the service since it forms and makes a special/direct link with the customer. It is not just thrown at a mass, and assumed that the target audience has picked it. Rather it is marketed directly at those whom we know will respond and need to know about the service. (Lovelock, 1996) Direct marketing can be done in many ways: Direct marketing will be done by personnel who will call up customers to inform them of a date and time for the telecasting of a special match. Once customers start coming in, they will be asked to fill information forms, which will include their telephone number and postal address. The flyers of the caf showing football matches will also be sent to these postal addresses as well as randomly distributed on traffic signals and shopping malls. These flyers will be shaped in the form of football, thus showing the special characteristics that the premise of the caf possesses - that is the theme of a football match. (Wright, 2002) Even a customer care telephone number will be set up which will take the telephone calls of the customers who want to find out about the date and time of a particular match or want to book the venue for theme based parties. Such ordering and booking as well as queries will be answered through this customer care number. Even emails can be sent to the customers so that they can get to know about the service and the specifics for the match telecast comfortably on their desktop screens only. Secondly, the marketing strategy of advertising can also be used. Though it is an expensive means of promoting the service, it is worth it since it appeals to the mass audience and even covers those who have been missed out while doing direct marketing. (Berry, 2004) This advertisement need not be too frequent, rather it can be only done in sports magazines and done when a special match is being telecasted, for instance a football world cup final. Place (Distribution) As far as services are concerned, the location has to be primary because the customer should be able to have easy access to the place if they want business performance to improve. The sports cafe should have a very strategic position. It should be in the centre of the Business Centre of whichever country it is being opened in. It will be ensured that there are no other competitors which are in the Business Centre. The nearest competitor should be a kilometer away. So business-wise, it will be a great location since all the people working in the business centre can easily access it. Physical Evidence Physical evidence is one of the extended components of the marketing mix. It is a very important aspect in positioning the service and communicating service quality. When a customer will approach the entrance of the caf, from that moment till he leaves the caf, physical evidence of the caf is extremely important so as to determine the kind of the image the customer takes back with himself. For instance, the welcome that is given to him by the waiters when he enters will be remembered in good terms if it is courteous and will be negatively reminiscence if it is hostile or inappropriate. The aura and atmosphere created in the caf will be part of physical evidence. The gear of the waiters will be part of physical service. (Hague, 2002) MODE OF ENTRY The mode of entry would be an international sales subsidiary - that is, the company would open its caf from scratch and would not rely on joint ventures, strategic alliances, or international agents. It would be accepting a lot of risk as well by using this mode of entry into the international arena. THE LOCATION OF EACH STAGE OF THE VALUE CHAIN The value chain consists of those activities within the process that add value to the products and services being produced by the firm. There are primary as well as secondary activities in the value chain. Primary consists of logistics of both types: inbound and outbound, production, marketing and sales, and maintenance. Secondary activities involve IT and management of the human resource among many others. The location of logistics, production as well as maintenance will be within the country where the sports caf will be opened. Marketing plans, on the other hand, can be sketched in Harare, Zimbabwe, the native country of the firm Interfresh Ltd. BIBLIOGRAPHY 1. Rust, R. (1996), Service Marketing, HarperCollins College Publishers. 2. Clarke, G. (2000) Marketing a Service for Profit. Kogan Page Publishers. 3. George, W. (1981) Marketing of Services. American Marketing Association. 4. Lovelock, C. (1996) Services Marketing. Prentice Hall. 5. Wright, L. (2002) Principles of Services Marketing and Management. Prentice Hall. 6. Berry, L. (2004) Marketing Services: Competing through Quality 7. Bruhn, M. (2006) Services Marketing: Managing the Service Value Chain. Prentice Hall. 8. Kurtz, D. (1998) Services Marketing. John Wiley & Sons 9. McKeever, M. (2007) How to Write a Business Plans. Nolo. 10. Bangs, D. (2002) The Market Planning Guide. Kaplan Publishing. 11. Kotler, P. (1988) Marketing Management: Analysis, Implementation, Planning and Control. Prentice Hall. 12. Horowitz, S. (2000) Grassroots Marketing: Getting noticed in a noisy world. Chelsea Green Pub. 13. Pinson, L. (1993) Target Marketing for the Small Business: Researching, Reaching, and Retaining Your Target Market. Upstart Pub Co. 14. Abrams, R. (2003) The Successful Business Plan: Secrets and Strategies. The Planning Shop. 15. Hiebing, R. (2003) The Successful Marketing Plan: A Disciplined and Comprehensive Approach. McGraw-Hill 16. Pinson, L. (2001) Anatomy of a Business Plan. Dearborn. 17. McGukin, F. (2005) Business for Beginners: From Research and Business Plans to Money, Marketing and the Law. Sourcebooks 18. Birn, R. (2002) Market Research. Capstone. 19. Hague, P. (2002) Market Research: A Guide to Planning, Methodology and Evaluation. 20. Gilligan, C. (2005) Strategic Marketing Management: Planning, Implementation and Control. Butterworth-Heinemann 21. Friedman, R. (1994) Front Stage, Backstage: The Dramatic Structure of Labour Negotiations. The MIT Press. 22. Nunnally, E. (1989) Communication Basics for Human Service Professionals. Sage 23. Tollin, K. (1996) Combining Low Price with Service. Department of Marketing, The Copenhagen Business School. 24. Johnston, R. (2005) Service Operations Management: Improving Service Delivery. Prentice Hall. Read More