Ice Cool Water Business Idea - Essay Example

?Be Your Own Boss 24th April Word Count 1680 Introduction to business idea In the contemporary world, the demand for water by industries especially the chemical and food producing companies has been on the rise. This is due to the fact that companies have embarked on increasing their production capacity with an aim of putting at bay their competitors. One of the implications on the increased use of water by the industries is that global community has been exposed to risks that are associated with dangerous effluents from the factories. In addition, there has been scarcity of clean water especially in the developing countries leading to an increase of water borne diseases and deaths. For example, in the developing countries young children at the age of less than five years experience an average of 10 attacks of water borne diseases. Ice Cool Water Company (ICWC) is focused at providing safe and clean Ice Cool water within Birmingham City where the firm will be located. In order to ensure Ice Cool remain competitive in the bottled water industry, it will in future emulate extensive marketing strategies and adequate research to ensure that it meets the high demand for clean water in regions like Bangladesh, Nepal, and developing countries within the Africa continent. Feasibility of the business idea Birmingham City has the population of more than 1.4 million people making it to be the second most populous city after London (Hodder, 2004). In this regard, Ice Cool Water has a high possibility of acquiring a large market segment. To expand its supply to match with the consumers demand, ICWC will need to employ large number of skilled manpower that will also ensure quality products are provided in the market. Birmingham City University, one of the biggest universities in United Kingdom is a key institution that will provide experts who will be hired by the company. The skills possessed by the graduates from Birmingham City University and other institutions of higher learning within Birmingham's metropolitan area, provides effective and productive employees. In its production process, ICWC will greatly emphasize environmental conservation. In this way, the company will enjoy the support of the Birmingham Friends of the Earth, a volunteer group that advocates for development of industries that cater for conservation of the environment (Gordon, 1994).With a GDP of more than $90bn, the purchasing power of the of Birmingham residents is high. In this way, the company will not take a long time to break even thus making it to be at par with its competitors who are already established in the UK market (Kurtz, 2010). Being a renowned engineering and manufacturing centre, the city has high number of personnel who will be highly demanded in the production facility systems. This implies that ICWC will not incur high costs of hiring foreign engineers thus resulting to low costs of establishing the company. This feasibility study therefore shows that the establishment of ICWC is a viable idea and the company has the opportunity of excelling in the UK and international market. Market research and competitor analysis As mentioned earlier the city of Birmingham and Birmingham's metropolitan area in general, have high population resulting to establishment of large number of bottled water companies as they seek to expand their sales by meeting the high demand for their products in the market. Key competitors that ICWC will face include A Fine Choise Ltd, Aqua Amore Ltd, Refresh Water Ltd, Rent a Water Cooler, and Aqua Victis Ltd among others. Based on their early market entry, the competitors have the strength of large market segment and increased revenue. However, ICWC will provide quality and cheap bottled water that will ensure it attracts new customers even those who are loyal towards our competitors. It is worthy to note that even though the competitors have wide market segment, they have not effectively penetrated foreign market including Peru and Bangladesh where availability of clean and safe water is a challenge. In this regard, our company will focus at going global through entering the unexploited market in poor and developing countries. Key consumers targeted by ICWC include football players and fans, athletes as well as executives working in public and private sectors. To replace the energy lost by the footballers and the athletes, Ice Cool is aimed at providing quality water that will leave the players cool and energetic. Due to the strong desire to play and watch football among the residents of the Birmingham and UK in general, the company products will be highly demanded by well known football clubs such as Aston Villa F.C., Birmingham City F.C., and West Bromwich Albion F.C. among others. In its effort, to expand the demand of Ice Cool water and enhance consumer’s awareness, the company will allocate adequate funds to market its products in the forthcoming London 2012 Olympic Games. The company will utilise the games to offer its quality and discounted products to its consumers. Financing an enterprise To ensure that its marketing and administrative operations are effectively undertaken, the company is focused at hiring qualified personnel who include Managing Director, Human Resources Manager (HRM), Marketing and Sales Manager, Finance Manager as well as Logistics Manager. Through the assistance of HRM, the company will recruit skilled sales executives who will be responsible for promoting and advertising the company products. The table below indicates the financial requirements during the first year of the company operations. Financial estimates Item Amount in million ? Management team salaries 120 Sales executives salaries 6 Advertisements, promotions and public relations 3.5 Insurance 0.85 Buildings and office rent 2.4 Purchase of office furniture and computers 3.5 Total Expenses 136.25 Source- (Sullivan and Steven, 2003) In order to cater for all the items as stipulated by the budget, the company will seek for grants from UK government as well as other financial institutions. In the same way, private investors will be invited to purchase the company shares thus reinforcing the company capital base. Based on the anticipated future expansion in the international market, ICWC will undertake an Initial Public Offer (IPO) after the first year of operation. The company aims at raising ?1 billion through the IPO. In this way, members of the public will take the ownership of the company resulting to the listing of the company in the London Stock Exchange. This will not only improve the company’s financial position but also it will ensure effective management strategies to ensure increased shareholders return. Operational issues To ensure that Ice Cool water reaches its consumers in the market, the company will hire tracks from various transportation companies within and outside the city. In this way, products will be transported from production facility to the distributors. Retailers will then purchase the products from the distributors who will then sell to the final consumers. Additionally, ICWC will place its products in the big stores such as Tesco, Asda, Sainsbury's, and Morrison’s among others. In this way, consumers who reside near the supermarkets will easily access the products. One of the major initiatives that the company will initially adopt is placing of its market researchers in all the big stores to monitor the rate at which our products are purchased in comparison to those of the competitors. As mentioned earlier, Ice Cool Company will undertake extensive promotional strategies to ensure strong customer awareness. Major promotional strategies include sponsoring of football games, local and international athletics competition, and environmental conservation programs among others. Through such promotion the company will enjoy strong customer awareness and loyalty. Pricing strategy In a market that encompasses high number of competitors, an intensive research is vital to come up with appropriate prices that will attract more customers. Most of the competitors sell their brands between ?1.00 and ?3.99 per 100ml bottles. Being a new business venture, ICWC will not sell its 100 ml bottle for more than ?3.99 since this would drive away the customers who are already loyal to the competitors. In the same way, the company will not reduce its prices below ?1.00 since this would make some consumers to question the reliability and the quality of the products. In this regard, ICWC will price its brand at ?1.99 per 100 ml bottle. In addition, the company will adopt a promotional strategy during the first 4 months. This will involve selling two bottles of 100 ml for ?3.99. Summary and recommendations The current stiff competition in the bottled water industry, has given rise to high number of competitors not only in the UK market but also in other foreign markets. This has resulted to increased number of brands that has left consumers with many choices. For example, over 157 varieties of bottled water are sold in the UK market. Due to the high demand of the bottled water in the UK market, foreign brands such as Fiji water and Vittel have been introduced resulting to more competition. In its effort to curb the stiff competition, Ice Cool Company will focus at hiring competent employees who will ensure that the quality of its product is not compromised. This will entail recruiting of engineers and other personnel who are based in Birmingham City. Additionally, the company will put in place a strong team that will oversee all the operations that include marketing and management activities (Kotler and Kevin, 2009). For the company to be successful, it will seek financial assistance from the UK government, private investors and through an IPO. In the same way, ICWC is focused at entering the market by lowering it prices to attract and retain its new customers. One of the major recommendations is that due to the stiff competition in the bottled water market, ICWC should form a merger with one of the established companies. This will not only reduce the initial costs of establishing the new business venture, but ICWC will have the opportunity to use the marketing strategies adopted by its partner. In the same way, ICWC should utilise e-marketing in order to reach more consumers. This involves use of social sites such as face book and twitter to inform its consumers about its prices and promotions. Ice Cool Water Company should also establish production facilities and distribution branches in developing economies. In this way, it will avoid the costs of transporting the products from its headquarters in Birmingham City to its consumers in other parts of the world. References Gordon E. 1994. Birmingham A Study in Geography, History and Planning. Stroud: Tempus Publishing. Hodder, M. 2004. Birmingham: the hidden history. Stroud: Tempus Publishing. Kotler, P., Kevin, K.2009. A Framework for Marketing Management. New York: Pearson Prentice Hall. Kurtz, D. 2010. Contemporary Marketing Mason. OH: South-Western Cengage Learning. Sullivan, A., Steven M. 2003. Economics: Principles in action. New Jersey: Pearson Prentice Hall. Read More