Strategic Management of Resources and Relationship - Case Study Example

Running head: BUSINESS PLAN BUSINESS PLAN: GYM WITH NURSERY IN SAUDI ARABIA TO MEET THE NEEDS OF MOTHERS by Professor’s name University name City, State Date Table of Contents 1.0 Executive Summary 3 2.0 The market 4 3.0 Service 4 4.0 The business of Halima’s gym 5 5.0 The marketing strategy 8 6.0 Forecasts of sales, cash flow and break even 9 1.0 Executive Summary Weight has become a big issue in the society. With lifestyle diseases like diabetes and high blood pressure being at an all-time high, people have decided to take control of their health. One of the causes of overweight and obesity is the sedentary lives that people live. Convenience is the disease ailing the 21st century. Everything can be obtained by a click of the mouse in the comfort of one’s home. Saudi Arabia has recently been experiencing rising cases of obesity especially among women. Traditionally Saudi women are not allowed to work outside the home. With nothing to do, most of them are encouraged to live sedentary lives. Most women have weight issues after they have a baby. For Saudi women losing weight has been a problem because there are not many designated gyms for women. The few that are there do not provide child care for their clients. The establishment of gyms has been a long way coming. The strict rules against gender interaction at work places has made it difficult for investors to set up gyms given that women are not allowed to leave the home without permission or un accompanied by a male relative. Gym Halima intends to fill this gap and offer a place where women can work out and at the same time have their children taught and taken care of. This will enable them work out without any worries of going to pick their children from school and concentrate on their workout. This business plan shows how concentrating on the fitness needs of the women of Saudi Arabia can be profitable. The provision of a children’s nursery will be an added advantage for Halima’s Gym. 2.0 The market Sedentary lifestyles have led to an all-time high number of lifestyle diseases. People are beginning to live a healthy lifestyle and workout and fitness is part of this healthy lifestyle. A healthy lifestyle does not only involve being conscious about what you eat, it also involves a conscious decision to live an active life. Traditional stringent laws of Saudi Arabia have kept women out of the gym. Women are only allowed to exercise in aprivate place which are mostly frequented by men whom they are not supposed to be mingle with in such places. When the idea of female gyms came to Saudi Arabia, it was welcome by most women. However the prices charged by these gyms way too high and most women could not afford them. To date, the prices of these gyms are still too high for most women. Halima’s gym brings quality and affordability to the market of female gyms. With qualified instructors who have worked in the industry for over five years, Halima’s gym is poised to be a leader in female fitness inSaudi Arabia.The nursery that the gym intends to add to its service offeringgives it an added advantage over it competitors. The business of female gyms is booming in Saudi Arabia,and internationally known gyms like World Gym opened new branches in Saudi Arabia in 2013(Westrfield et al., 2008). Market trends also show the demand for affordable female gyms in Saudi Arabia. The industry has grown immensely from 2009 with world known brands setting up fitness clubs in the region. The challenge, however,is to move these fitness clubs to other regions like Jeddah and other areas on the east coast of the kingdom. 3.0 Service Halima’s gym will be offering fitness services that include; Yoga, Pilates, Body pump, Zumba, kickboxing, aerobics, group exercises, individual exercises, individual sauna and steam rooms, locker rooms, free weights, nutritional programs, personal training, fitness assessment, weekly progress check sessions with a trainer, massage, cycling studio and dietary maintenance(Pinson, 2004, pp.20). The nursery will admit children from the ages of 1 to 6. For the children aged 1 to 2, there will be a play school where they will be taught how to play with other children and the importance of sharing. Older children will be placed in their respective classes of baby class intermediate and pre unit classes. 4.0 The business of Halima’s gym Halima’s gym is a female fitness centre that intends to provide for the fitness needs of Saudi women and extend an olive branch to its client by availing a nursery for their children. In accordance with the Saudi laws and regulations, the gym intends to hire qualified female instructors and equally qualified female teachers for the children’s nursery. Women always want to lose baby weight as soon as humanly possible. However,in Saudi Arabia this has been difficult because of the stringent rules that traditionally prohibit women from leaving home unaccompanied until they reach the age of 45. The female gyms in Saudi Arabia are highly priced,and most women cannot afford them. Halima’s gym intends to provide these fitness services at an affordable rate and in an environment that is safe for their children too. The mission of Halima’s gym is to combine product offering, quality service and marketing to become the gym of choice for Saudi women. Most gyms in major cities in the gym charge an average of $250 per month. With a competitive price of $ 150, Halima’s gym is poised to be the fitness center of choice for women in Saudi Arabia. Product offering: Halima’s gym will be offering not only fitness services to its female clients,but there will also be a nursery for children aged between 1 and 6. Covering the schooling of the children up to preprimary. This product offering is pioneer and unique in the female gym industry in Saudi Arabia,and it bound to give Halima’s gym a competitive edge over its competitors. Quality service: Halima’s gym will hire qualified fitness experts from America,who have been working infitness with women for over five years. Their years of experience will be handy in helping our clients achieve their fitness goals. The addition of a nursery to the business model will ensure that clients are not worried about the collection of their children from school during workout. Every woman’s needs will be taken into account in the fitness sessions. Marketing: Since the gym’s target market is not allowed to leave home often, the company intends to market its products through hair salons and magazines which are popular with Saudi women. Marketing will also be done through the media during female programs and in health awareness programs and campaigns. The long term goal of the company is to become a household name in female fitness. This will be achieved by intensive and constant marketing coupled with the provision of quality and affordable services. Halima’s gym has two owners; RashidaAbdallah and FaizaMuhmin. The two have anequal share in the company. Rashida has a fitness background and received her fitness training in America.Faiza in the other hand is an expert in childhood education. She has a master’s degree in childhood education and was a lecturer at Brown University for five years.She will be in charge of the nursery while Rashida will be in charge of the gym. Halima’s gym management team will be as follows: Halima’s gym intends to hire the best in the market both for the gym and the nursery school. The company will be run by two executives who are the co-founders. Each will take care of their area of expertise. There will be three trainers, a secretary and an accountant at the gym and four teachers at the nursery school who will be employed on a permanent basis. There will also be other two employees who will be hired on contract and they will be in charge of the play area. Since the gym will be located in a mall, the play area will serve the children after normal school hours just before they are picked up by their mothers(Harrison, 2003). The job description and duties of the personnel will be as follows RashidaAbdallah: She will be the CEO and will also be in charge of the gym. Her duties will include; recruiting trainers, making sure the gym is in good condition, receive equipment restocking orders from the trainers.Rashida has a fitness background and received her fitness training in America.Her salary will be $3000 FaizaMuhmin: Assistant CEO in charge of the nursery school. She will be the administrator of the nursery school and will also be in charge of recruiting teachers and ensuring that the nursery and the play area are well equipped. Faiza in the other hand is an expert in childhood education. She has a master’s degree in childhood education and was a lecturer at Brown University for five years.Her salaries will be $ 2500. Accountant: Zoe Mohamed A qualified accountant with a degree from the University of Cairo; seven years work experience in the same position in a fitness company. Will be in charge of preparing financial statements and computation of accounts. Salary will be $ 2000 Secretary: Nazlin Umar Will be in charge of scheduling fitness classes, provision of information for the customers; arrange class times for both mothers and children. She will be paid $1500. Trainers: Fatma Mohamed, Maria Doba and Shirley Abubakar. They will be responsible for training the female clients, give them nutritional advice and advise them on how to reach their fitness goals. They will be paid $ 2000 each. Nursery teachers: AtkiKaradshe, Halima Jamjum, Nerea Sultan and Unnima Suleiman They will be in charge of imparting knowledge to the children in nursery; making sure the children are taught the necessary primary skills. The teachers have degrees in early childhood education and have experiences of more than three years. They all grew up and went to school in America are of Muslim faith so our client will not have to worry about their children being taught by non-Muslims. They will be paid $ 1500. Part time employees: RaziaAbdulaziz and ShifaAbdalla They will be in charge of the playground; making sure that it is safe for the children. They will also be responsible for the safety of the children while in the playground. One of the playground managers is experienced in playground management while the other is just beginning to learn the ropes of playground management(Mankiw & Taylor, 2008). The experienced playground manager will be instrumental in teaching the other manager. They will be paid $ 1000. 5.0 The marketing strategy Halima’s gym will be located in Jeddah the second largest city in the Kingdom of Saudi Arabia. The company intends to market its services through print media especially those popular with women. Since the company will be targeting women who want to live a healthy lifestyle, it will also market its services in television programs that promote healthy living. Other forms of advertising will be inform of campaigns held by the company and brochures that will be oriented and distributed in malls and beauty salons(Kottler, 2008). The company also intends to put up a website which will also act as an advertising tool. Since the company is not well known like other international brands, it will have to intensify its advertising to increase brand awareness. 6.0 Forecasts of sales, cash flow and break even Costs Stat up cost These are the amounts of money needed to get the business up and running. The startup costs for Halima’s gym include Startup costs Fixed costs/ month Variable costs/uni Business license 2000 Rent 800 Stationery 10 Loan 200 Registration 2500 Marketing 1000 Training 50 Lease contract 12500 Salaries 23000 Nursery 40 Working cash 23000 Total 40000 25000 100 It is assumed that all the females who come to the gym will have at least one child who they will enroll at the nursery school. They will be charged a flat rate of $ 150 per pair of mother of achild. The company will need an initial working cash of 23,000 to take care of employee salaries in the first month of operation. Break even analysis Break-Even Point (units) = 500 Break-Even Point ($s) = $75,000 Total Fixed Costs TFC = $25,000 Formulas: Variable Cost per Unit VCU = $100.00 BEP (units) = TFC/(SPU-VCU) Sales Price per Unit SPU = $150.00 BEP ($s) = BEP (units) * SPU The company has to sign up 500 pairs of mother and child per month to be able to break even. This will give the company revenue of $ 75,000 per month and $ 900,000 per year. To achieve this, the company has to price it gym and nursery services at $ 150. This is much affordable as compared to what female gyms charge in Saudi Arabia. Cash flow and sales projections Sales forecast The company needs to register at least 500 mothers with children in order to break even. It is estimated that, in 2015 and 2016,the company will have 700 and 1,000 mothers every month. Sales forecasts for the years 2014, 15, and 16 are listed below Year Forecasts 2014 6,000 2015 8,400 2016 12,000 Production budget 2014 2015 2016 Fitness training 300,000 420,000 600,000 Nursery 240,000 320,000 480,000 Stationery 60,000 84,000 120,000 The production budget represents what it will cost to have customers at the gym in 2014, 2015 and 2016 Cash flow forecast Opening balance 0 3,000 139,000 Receipts 2014 2015 2016 Sales 900,000 1,260,000 1,800,000 Investments loan 20,000 0 0 Total 920,000 1,260,000 1,800,000 Payments 2,014 2015 2016 Rent 9,600 9,600 9600 Marketing 12,000 12,000 12,000 Salaries cost 276,000 276,000 276,000 Startup costs 17,000 0 0 Loan repayment 2,400 2,400 2,400 Stock 600,000 824,000 1,200,000 Total payments 917,000 1,124,000 1,500,000 Closing balance 3,000 139,000 439,000 Because this is a cash business, there will be no opening balance at the beginning of the year. 2014 is expected to have a closing balance of $ 3,000 while the closing balance of $ 139,000 is expected for 2015 and $ 439,000 for 2016. Profit and loss Profit and loss 2014 2015 2016 Sales 900,000 1,260,000 1,800,000 Cost of sales 600,000 824,000 1,200,000 Gross profit 300,000 436,000 600,000 Expenses 317,000 300,000 300,000 Rent 9,600 9600 9600 Staff cost 276,000 276,000 276,000 Startup costs 17,000 0 0 Marketing 12,000 12,000 12,000 Loan 2,400 2400 2,400 Net profit -17,000 136,000 300,000 Despite breaking even, Halima’s gym will make a loss of $ 17,000 in 2014. However,this is not so bad for a new company with such a huge amount of investments. In 2015 things are expected to improve,and the company is expected to make $ 136,000 and an even a higher amount of $ 300,000 in 2016. Balance sheet Balance sheet 2014 Fixed assets Equipment 17,000 Current assets Cash 3,000 Stock 600,000 Total assets 620,000 Liabilities 20,000 Loan 20,000 Total 600,000 References Harrison, J., 2003. Strategic Managements of Resources And Relationship. New York: Leyh Publishing. Kottler, P., 2008. Philip Kot. Principles of Marketing. In G. A. Philip Kotler, Principles of Marketing. Essex: Personal Education Limited. Mankiw, N. G. & Taylor, . M. P., 2008. Economics. London: Pat Bond. Pinson, L., 2004. Anatomy of a Business Plan: A Step-by-Step Guide to Building a Business and Securing Your Company’s Future. 6th ed. Chicago, USA: Dearborn Trade. Westrfield, R. W., 2008. Modern Financial Management. New York: McGroaw Hill. Read More