Ibusiness Plan Draft Final

8/2/2019 Ibusiness Plan Draft Final

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Coffee Break Business Plan

Course : Business Policy

Group memebers : Nazma Feroze 093115

: Salman khan 083151 : Amber Batool 083145

: Sana Tahir 093111

: Najma Sultana 091112

: M Asad ur Rehman 082165

Submitted to : Sir Faisal Awan

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Table of ContentsTable of Contents ................................................................................................... 2

B. Business definition goals and objectives: ......................................... 5

C. Summary of financial needs and application of funds ............................ 5

Porter Model: ....................................................................................................... 5

B. Industry trends: ....................................................................................... 6

Porter's Generic Competitive Strategies (ways of competing) ................................. 6

1. Cost Leadership ............................................................................................... 6

2. Differentiation ................................................................................................. 7

3. Focus ............................................................................................................... 7

The focus strategy has two variants....................................................................... 7

Porter's Competitive Advantage ............................................................................. 7

Competitive Advantage ...................................................................................... 8

The danger of being 'stuck in the middle .......................................................... 8

Risk of generic competitive strategies .................................................................... 9

Risks of overall cost leadership: .......................................................................... 9

Risks of differentiation:...................................................................................... 10

Risks of focus: ................................................................................................... 10

Choosing the Right Generic Strategy .................................................................... 11

Use the following steps to help you choose....................................................... 11

B. Proprietary position: patents, copyrights and legal issue .................13

IV. Manufacturing Processes (If Applicable) .................................................13

A. Materials ......................................................................................... 13

B. Source of supply ................................................................................. 13

C. Production methods ............................................................................. 13

V. Marketing strategy ....................................................................................... 13

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A. Market segmentation strategies .............................................................. 14

B. Target Market ......................................................................................... 14

C. Hot Drinks Forecast Largely Positive .................................................. 14

D. Pricing policy ............................................................................. 14

E. Distribution strategies ................................................................. 14

PETS Analysis ....................................................................................................... 15

C. Officers: organization chart and responsibilities: ................................ 16

VII. Other Pertinent Information, Plans .................................................................. 18

TOWS Matrix ......................................................................................................... 22

Why use the tool? ............................................................................................. 22

How to use tool: ............................................................................................... 22

Strengths/Opportunities: .................................................................................. 22

Strength/Threats: ............................................................................................. 22

Weaknesses/Opportunities: .............................................................................. 22

Weaknesses/Threats: ....................................................................................... 22

Forecasting techniques ......................................................................................... 22

Income Statement ............................................................................................... 24

Balance Sheet ...................................................................................................... 25

Financial Ratio ...................................................................................................... 26

Statement of Equity .............................................................................................. 27

VIII. Exit strategy .................................................................................................. 28

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I. SummaryA. Business Description

1. Vision:

To become the coffee supplier of excellence to its customers

throughout the region, by consistently delivering exciting

products sensational and experiences to an increasing no of

admires.

2. Mission:

To earn the loyalty of customers and grow the business by

developing and marketing coffee products that are leader in

quality and customer enthusiasm.

3. NameCoffee break

Slogan : Fun for Break

4. Location

Liberty market Gulberg Lahore

5. Product(s)

Coffee

6. Market and competition

Consumer market(Lahore liberty market)

It is potential market as there are only 4 outside shops coffee points

According to season it is a demanding product.

7. Management experience

Coffee break is owned by our six boards of directors holding master Degree inBusiness Administration from the Institute of management sciences. We all arestarting new business. No experience in relevant field but get experience from the

other existing person.

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B. Business definition goals and objectives:

To become best coffee point in Lahore

Turn in profit in first month of operation

Maintain 65% gross margin

C. Summary of financial needs and application of funds

Legal expenses 3000

Marketing promotion expenses for the opening of no expense

Insurance (general liability, workers' compensation and property casualty) coverageat a total premium of 1000

Premises remodeling in the amount 3000.

Other start-up expenses including stationery (43200) and phone and utility deposits(50000).

The required start-up assets of 22000 and

Operating capital in the total amount of 180134 per year, which includes all theexpenses

Start-up inventory of 4800, which includes

Coffee beans (12 regular brands and five decaffeinated brands) 240/day

Coffee maker 22000

II. Market AnalysisA. Description of total market:

Liberty market is attractive consumer market .Although there are manyFood and drinks points and restaurants located in and near liberty but stillIt is a potential market.

This is a good place family week-end dine out bonanzas and tourists andforeigners roaming in Lahore. The winter season also enforce people to have coffee,

when they are shopping. And, the office workers are also need to have coffee as pertheir work load and the youth in colleges also.

Porter Model:

There are 6 forces in the portermodel their affect on our coffee shop is as follows:1. Threat of New Entrants: As we are managing small business so any company with morefinance can take over us easily so it is high threat.2. Threat of Rivalry: It is major threat as there are many direct and indirect competitors arein the market with more products assortments and good store or hotel atmosphere.3. Threat of Substitutes: Coffee is included in beverages category and it can be cold or hotand in our market there a number of beverages .

4.Threat of Buyers: Buyers are price sensitive so they are more conscious about that andthey are hesitate to buy coffee.

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5. Threat of Suppliers: Supplier are more demanded they change their supply process6. Threat of Stakeholders: Government policies are one of threat for our product

B. Industry trends:

Lahore is famous for its food liking and trend for coffee is increasingday by day in adults ,youngs, students ,employees etc.

Porter's Generic Competitive Strategies (ways of competing)

A firm's relative position within its industry determines whether a firm's profitability is above or

below the industry average. The fundamental basis of above average profitability in the long run is

sustainable competitive advantage. There are two basic types of competitive advantage a firm can

possess: low cost or differentiation. The two basic types of competitive advantage combined with the

scope of activities for which a firm seeks to achieve them, lead to three generic strategies for

achieving above average performance in an industry: cost leadership, differentiation, and focus. The

focus strategy has two variants, cost focus and differentiation focus.

1. Cost Leadership

In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost

advantage are varied and depend on the structure of the industry. They may include the pursuit of

economies of scale, proprietary technology, preferential access to raw materials and other factors. A

low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and

sustain overall cost leadership, then it will be an above average performer in its industry, provided it

can command prices at or near the industry average.

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2. Differentiation

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are

widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as

important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a

premium price.

3. Focus

The generic strategy of focus rests on the choice of a narrow competitive scope within an industry.

The focuser selects a segment or group of segments in the industry and tailors its strategy to serving

them to the exclusion of others.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus

a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences

between a focuser's target segment and other segments in the industry. The target segments must

either have buyers with unusual needs or else the production and delivery system that best serves the

target segment must differ from that of other industry segments. Cost focus exploits differences in

cost behavior in some segments, while differentiation focus exploits the special needs of buyers in

certain segments.

Porter's Competitive Advantage

Competitive advantage (CA) is a position that a firm occupies in its competitive landscape. Michael

E. Porter posits that a competitive advantage, sustainable or not, exists when a company makeseconomic rents, that is, their earnings exceed their costs (including cost of capital). That means that

normal competitive pressures are not able to drive down the firm's earnings to the point where they

cover all costs and just provide minimum sufficient additional return to keep capital invested. Most

forms of competitive advantage cannot be sustained for any length of time because the promise of

economic rents drives competitors to duplicate the competitive advantage held by any one firm.

A firm possesses a Sustainable Competitive Advantage (SCA) when it has value-creating processes

and positions that cannot be duplicated or imitated by other firms that lead to the production of above

normal rents. An SCA is different from a competitive advantage (CA) in that it provides a long-term

advantage that is not easily replicated. But these above-normal rents can attract new entrants whodrive down economic rents. A CA is a position a firm attains that lead to above-normal rents or a

superior financial performance. The processes and positions that engender such a position are not

necessarily non-duplicable or inimitable.

Analysis of the factors of profitability is the subject of numerous theories of strategy including the

five forces model pioneered by Michael E. Porter of the Harvard Business School.

In marketing and strategic management, sustainable competitive advantage is an advantage that one

firm has relative to competing firms. The source of the advantage can be something the company does

that is distinctive and difficult to replicate, also known as a core competency -- for example Procter &

Gamble's ability to derive superior consumer insights and implement them in managing its brandportfolio. It can also be an asset such as a brand (e.g. Coca Cola) or a patent, such as Viagra. It can

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also simply be a result of the industry's cost structure -- for example, the large fixed costs that tend to

create natural monopolies in utility industries. To be sustainable, the competitive advantage must be:

1. Distinctive

2. Proprietary

Competitive Advantage

Competitive Advantage: a company is said to have a competitive advantage over its rivals when its

profitability is greater than the average profitability of all other companies competing for the same set

of customers.

Sustainable Competitive Advantage

Sustainable Competitive Advantage: a company has a sustained competitive advantage when its

strategies enable it to maintain above-average profitability for a number of years.

Competitive advantages vary from situation to situation and from time to time. Some basic examples

of CAs can be divided in 4 main global areas:

Cost: Low-cost operations

Quality: High quality, Consistent quality

Time: Delivery speed, On-time delivery, Development speed

Flexibility: Customization, Volume flexibility, Variety

The danger of being 'stuck in the middle

Make sure that you select one generic strategy. It is argued that if you select one or more approaches, and then

fail to achieve them, that your organization gets stuck in the middle without a competitive advantage.

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Risk of generic competitive strategies

Risks of overall cost leadership:

Cost leadership imposes severe burdens on the firm to keep up its position, which means reinvesting

in modern equipment, ruthlessly scrapping obsolete assets, avoiding product line proliferation and

being alert for technological improvements. Cost declines with cumulative volume are by no means

automatic, nor are reaping all available economies of scale achievable without significant attention.

Cost leadership is vulnerable to the risks, such as relying on scale or experience as entry barriers.

Some of these risks are

technological change that nullifies past investments or learning;

low-cost learning by industry newcomers or followers, through imitation or through theirability to invest in state- of-the-art facilities;

inability to see required product or marketing change because of the attention placed on cost; Inflation in costs that narrow the firms ability to maintain enough of a price differential to

offset competitors brand images or other approaches to differentiation.

The classic example of the risks of cost leadership is the Ford Motor Company of the 1920s. Ford had

achieved unchallenged cost leadership through limitation of models and varieties, aggressive

backward integration, highly automated facilities, and aggressive pursuit of lower costs through

learning. Learning was facilitated by the lack of model changes. Yet as incomes rose and many buyers

had already purchased a car and were considering their second, the market began to place more of apremium on styling, model changes, comfort, and closed rather than open cars. Customers were

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willing to pay a price premium to get such features. General Motors stood ready to capitalize on this

development with a full line of models. Ford faced enormous costs of strategic readjustment given the

rigidities created by heavy investments in cost minimization of an obsolete model.

Another example of the risks of cost leadership as a sole focus is provided by Sharp in consumer

electronics. Sharp, which has long followed a cost leadership strategy, has been forced to begin anaggressive campaign to develop brand recognition. Its ability to sufficiently undercut Sonys and

Panasonics prices was eroded by cost increases and U.S. antidumping legislation, and its strategic

position was deteriorating through sole concentration on cost leadership.

Risks of differentiation:

Differentiation also involves a series of risks:

The cost differential between low-cost competitors and the differentiated firm becomes too

great for differentiation to hold brand loyalty. Buyers thus sacrifice some of the features,services, or image possessed by the differentiated firm for large cost savings;

Buyers need for the differentiating factor falls. This can occur as buyers become moresophisticated;

Imitation narrows perceived differentiation, a common occurrence as industries mature.

The first risk is so important as to be worthy of further comment. A firm may achieve differentiation,

yet this differentiation will usually sustain only so much of a price differential. Thus if a differentiated

firm gets too far behind in- cost due to technological change or simply inattention, the low cost firm

may be in a position to make major inroads. For example, Kawasaki and other Japanese motorcycle

producers have been able to successfully attack differentiated producers such as Harley-Davidson and

Triumph in large motorcycles by offering major cost savings to buyers.

Risks of focus:

Focus involves yet another set of risks:

the cost differential between broad-range competitors and the focused firm widens toeliminate the cost advantages of serving a narrow target or to offset the differentiationachieved by focus;

The differences in desired products or services between the strategic target and the market as a wholenarrows; competitors find submarkets within the strategies.

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Choosing the Right Generic Strategy

Your choice of which generic strategy to pursue underpins every other strategic decision youmake, so it's worth spending time to get it right.

But you do need to make a decision: Porter specifically warns against trying to "hedge yourbets" by following more than one strategy. One of the most important reasons why this is wiseadvice is that the things you need to do to make each type of strategy work appeal to differenttypes of people. Cost Leadership requires a very detailed internal focus on processes.Differentiation, on the other hand, demands an outward-facing, highly creative approach.

So, when you come to choose which of the three generic strategies is for you, it's vital that youtake your organization's competencies and strengths into account.

Use the following steps to help you choose.

Step 1: For each generic strategy, carry out a SWOT Analysis of your strengths andweaknesses, and the opportunities and threats you would face, if you adopted that strategy.

Having done this, it may be clear that your organization is unlikely to be able to make a successof some of the generic strategies.

Step 2: Use Five Forces Analysis to understand the nature of the industry you are in.

Step 3: Compare the SWOT Analyses of the viable strategic options with the results of yourFive Forces analysis. For each strategic option, ask yourself how you could use that strategy to:

Reduce or manage supplier power.

Reduce or manage buyer/customer power.

Come out on top of the competitive rivalry.

Reduce or eliminate the threat of substitution.

Reduce or eliminate the threat of new entry.

Select the generic strategy that gives you the strongest set of options.

C. Competition

There are four direct competitors in that market and the indirect competitors are

Nescafe Tea, coffee

Nestle tea, coffee

Coffee stalls

Tapal tea

Supreme tea

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Vital tea

Small and large hotels in Lahore

III. Products or Services A. Description of product line

Simple cold coffee

Cold coffee with ice cream

Hot coffee

Tea

Choclate drink

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Star:Hot coffee

Cash Cow:Cold coffee with ice cream and chocolate drink

Dog: Tea

Question Mark: Any new product

B. Proprietary position: patents, copyrights and legal issue

We ae registered and no legal issue.

IV. Manufacturing Processes (If Applicable)

A. Materials

Coffee

Milk

Sugar

Disposable cups

Disposable sticks

Coffee maker(machine)

B. Source of supply

Our Distribution channels are, coffee beans comes from whole sale market to

our H.Q in Lahore then distributed the quality coffee beans to each and everyout let, they crush them selves and maintain the taste and serve the ultimate

consumers.

C. Production methods

Automatic coffee is prepared through coffee machine.

V. Marketing strategy

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VI. Management PlanA. Form of business organization:

Our business form is Partnerships unincorporated. We are six partners

(unlimited liability for the business). We will distribute all profits and losses

without regard for any profits retained by the business for cash flow purposes.

C. Officers: organization chart and responsibilities:

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D. Operating plan for the next three years:

We have to plan to expand our product lines and expanding our market not only in

Lahore but also in other cities and more spending on promotions

CEO

Nazma

Feroz

HR

Manger

Najma

Sultana

Financial

manager

Amber

Batool

Managing

Director

Salman

khan

Marketing

Manager

Sana

Tahir

Operation

Manager

Asad

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VII. Other Pertinent Information, Plans

Once your business plan is ready, you will want to go though it step by step and revise

it. Once this is done, you may submit the business plan to investors to obtain the capital

that is required for setting up the business.

During the startup process, you will have to review and revise the plan again and again.

Once your business is setup, your business objectives and other such specific details

will change from time to time. Change the business plan to accommodate for these

changes.

Internal Factors Weight Rating Weighted

Score

Comments

Opportunities

I. Boom in industryII. Demographic favor for

mass customizationIII. Growth in the rural market

.20

.15

.10

4.0

3.5

3.0

0.80

0.53

0.03

End user awareness

Economy segment

Threat

i. Strong caf stallsii. Jamin java and Gloria

jeansiii. New product advances

0.25

0.20

0.10

4.0

3.0

2.5

1.0

0.06

0.03

Well positioned

Questionable

Total 1.0 2.45

External Factors Weight Rating Weighted

Score

Comments

Strength

I. Experienced managementII. Taste

0.20

0.35

4.0

4.0

0.80

1.4

Know the food industry

Recipe

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Weaknesses

I. Product portfolioII. Process oriented research and

developmentIII. No sitting arrangement

0.10

0.05

0.25

4.0

4.0

2.5

0.40

0.20

0.63

Concentration on serving

Slow in new product

Financial issues

Total 1.0 3.43

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Internal Strengths:

Strong R & D

Heavy Reliance on One

Product

Strong Sales and Service

Efficient Production

Internal Weaknesses:

Rising Costs in the market

New Experience in the market

External Opportunities:

Growing market demand with many

option

Attractive offers to build

SO:

Strong brand image.

Providing superior products

and services.

High quality control.

High quality of service.

The potential employees are

educated people which make it

easier to train them.

Could be able to change

negative image of coffee into

positive one

WO:

High pricing which cost not all kind

of market.

Cost sentimental issue for customers.

Too focus on domestic market

Some employees complaints about

the management.

Self esteem and need to be love or to

belong to community which is the

major reason why peoples buy a

product.

Employees which are easier to trainthem.

External threats:

Exposed to rises in the cost of coffee

and dairy product.

Many of the competitors are trying to

follow the same taste of coffee.

ST:

Feedback where customers

could send it by email.

Always treat the employees as

a partner not just as employees.

Always aim to help support

environment.

Limited number of strong

competitors.

Low income people are not

ready to buy coffee.

WT:

High pricing.

Complaints about the management.

People are not spending too much

money on coffee.

Penetrate more market segmentation.

Bad effect of coffee from society.

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Most important strategic

factors from EFAS & IFASWeights Ratin

g

Weigh

t score

L

O

N

G

S

H

O

R

T

I

N

T

E

R

M

E

D

I

A

T

E

I. Boom in industryII. Demographic favor for

mass customization

III. Strong caf stallsiv. Jamin java and Gloria

jeansv. Taste

IV. No sitting arrangement

0.20

0.10

0.10

0.20

0.20

0.20

4.00

3.50

4.00

3.00

4.00

2.50

0.80

0.35

0.40

0.60

0.80

0.50

)(

)(

)(

)

(

)

(

)(

1.00 3.45

Slow Cycle Resources Standard Cycle Resources Fast Cycle Resources

Strongly shielded Standardized mass Idea driven

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Brand name production

Economies of scales

TOWS Matrix

While we can use SWOT analysis as a framework for analyzing your strengths, weaknesses,

opportunities and threats you face, this breakdown becomes useless if it is not applied to improving

your competitive position. Two key points explain how to utilize this analysis:

Use strengths to capitalize on opportunities and to counter threats,

Use opportunities to minimize both weaknesses and threats, possibly avoiding

some altogether

Why use the tool?

TOWS Analysis is an effective way of combining a) internal strengths with external opportunities and

threats, and b) internal weaknesses with external opportunities and threats to develop a strategy.

How to use tool:

To carry out a TOWS Analysis, consider the following combinations:

Strengths/Opportunities:

Consider all strengths one by one listed in the SWOT Analysis with each opportunity to determine

how each internal strength can help you capitalize on each external opportunity.

Strength/Threats:

Consider all strengths one by one listed in the SWOT Analysis with each threat to determine how

each internal strength can help you avoid every external threat.

Weaknesses/Opportunities:

Consider all weaknesses one by one listed in the SWOT Analysis with each opportunity to determine

how each internal weakness can be eliminated by using each external opportunity.

Weaknesses/Threats:Consider all weaknesses one by one listed in the SWOT Analysis with each threat to determine both

can be avoided.

Forecasting techniquesQualitative vs. Quantitative Methods:

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Qualitative forecasting techniques are subjective, based on the opinion and judgment of consumers, experts; appropriate when past data is not

available. It is usually applied to intermediate-long range decisions.

Example of qualitative forecasting methods:

Informed opinion and judgment

Delphi method

Market research

Historical life-cycle Analogy

Expert opinion

Quantitative forecasting models are used to estimate future demands as a function of past data; appropriate when past data is available. It is

usually applied to short-intermediate range decisions.

Example of Quantitative forecasting methods:

Last period demand

Arithmetic Average

Simple Moving Average (N-Period)

Weighted Moving Average (N-period)

Simple Exponential Smoothing

Multiplicative Seasonal Indexes

These are different techniques of forecasting but we have used or implement EXPERT OPINION.

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Income Statement

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Balance Sheet

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Financial Ratio

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Statement of Equity

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VIII. Exit strategy

When we feel that know we make our business successful and our project will be done

then we communicate to all our stake holders about our business nature and renewal of

our contract if some of members want to continue he can continue business by giving

all member rights

Documents

Ibusiness Plan Draft Final