Understanding and developing a business case for new venture

By: Mehroze SultanTo: Mr. Ali Agah

Unit: Y/601/0546

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Acknowledgements:I highly appreciate the courage to our respected Mr. Ali Agha for their valuable guidance,

scholarly criticism, untiring help and enlightened supervision during the whole project and

making of the report.

Executive Summary:ii

This report is about the understanding and developing a new venture (Moonshine) for a Local Corporate Group (LCG). This report is mainly concerned with the legal structure, mission, vision, goals, objectives, market growth and customer service strategy of Moonshine. This report consists on the discussion of Stakeholders of Moonshine and policy to handle each stakeholder.

This report shows the justification for behavior of luxury goods and the financial prospect of Moonshine. The analysis of different companies from food and beverage sector of Pakistan is included in this report.

Moreover, detailed discussion about documentation and analysis of the responsibilities of Moonshine are also part of this report. .

There are numbers of recommendations for Moonshine have been written in this report to become more efficient and successful company.

Table of Contents:

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2. Acknowledgements…....................................................................ii

3. Executive Summary…………………………………………..………….………….iii

4. Table of Contents……………………………………………………….………….…IV

5. Company Name…...........................................................................5

6. Legal Structure………………………………………………………………………….6

7. Vision, Mission, Goals and Objectives……………………………………….7

8. Market share……….……………………………………………………………………8

9. Expected growth……………………….……………………………………………..10

10. Customer Service Strategy………………..……………………………………11

11. Stakeholders…………………………………………………………………….…….15

12. Financial prospect…………………..………………………………………………18

13. Marketing material………………………………………………………………….19

14. Administrative material…….……………………………………………………..20

15. Ethical responsibilities……………………………………………………………..21

16. Occupational health and safety………………………………………………..22

17. Bibliography……………………………………………………………………………..23

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Moonshine “A rich chocolate laced with finest coco”

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Legal structureLCG is going to introduce moon shine as a separate subsidiary and will have the following compensation:

Tax advantages Legal protection Share profit and losses Liabilities and credit claims

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Mission:We at moonshine chocolates choose to be the leader in the luxury chocolates, setting the standard by which all others are judged.

Vision:Our vision is to market our chocolate internationally giving all the people around the globe the opportunity to become loyal customers of a great product.

Goals: To provide a product with highest order of quality and service. To work globally. To constantly reinvent, innovate and implement ideas. To create a health and lively community by sharing knowledge and unwrapping human

potential in an environment of mutual respect. To become a market leader. Environmental responsibilities.

Objectives: Diversification to increase profitability through greater sales volume obtained from

products and new markets. Making and selling new product in order to guarantee growth. The major objective of the company is profit maximization to guarantee company

survival. Sales maximization. Improve product image by product development.

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Market Share:Luxury chocolate represents a dynamic market in many parts of the world, with global sales having risen by over 18% within the last year.

A new report predicts that the global chocolate market will grow to $98.3 billion in 2016 from the $83.2 billion it was at in 2010. The report - “Global Chocolate, Cocoa Beans, Lecithin, Sugar and Vanilla Market by Market Share, Trade, Prices, Geography Trend and Forecasts (2011-2016)” - was conducted by Markets and Markets (M&M). It shows that factors including the health benefits of chocolate, the large variety of applications and seasonal and festive sales all are expected to play a role in increasing the market.

But the market of luxury chocolate is predicted that global luxury chocolate market will grow to around US$12.9bn by 2012, from $6.95bn in 2007, on the back of growing awareness of premium chocolate, a widening consumer base, increasing consumer willingness to trade up, and continued emphasis on new product development. But in spite of recent growth, luxury products still represent less than 10% of the global chocolate market.

Some of the reports state that use of luxury chocolate is increasing immensely in most parts of Europe and US, this type of chocolate expenditure is increasing, purchasers of luxury chocolate are no longer confined to the higher income groups but the other classes of people are actively buying this.

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Source: Author & icco

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Expected growth:Chocolate offers very wide range of occasions to guarantee growth. Growth will be ensured by innovation and making and selling new products, which will result in profit maximization.

One of the primary demand drivers for chocolate and other sweets is consumer taste, and consumers continue to love chocolate. A recent study showed that 91% of females and 87% of males consume chocolate products. But the taste for chocolate is now expanding into highly populated nations with a growing middle class for example Pakistan, China and India. Rising disposable incomes and changing tastes will continue to drive growth in the industry overseas, just as improving domestic economic conditions increase sales at home.

The luxury chocolates have astonished many marketers and business observers with there continue sales and growth even during the time of recession.

Profitability for large confection and candy producers is derived from manufacturing and supply chain efficiency, as well as effective marketing. Smaller companies look to offer premium or specialty products. For all companies involved in the chocolate industry, however, rising commodity prices can be cause for concern. Cocoa prices can be exceedingly variable as it is largely grown in developing nations with often unstable political situations. Recent turmoil in the Ivory Coast, the largest producer of cocoa, has caused prices to skyrocket for the beans. Lack of access to modern insecticides and fertilizers also makes production less predictable. Large producers of cocoa manage and absorb much of this risk, but will begin to pass on higher prices beyond a certain point.

There are a number of trends within the chocolate industry that are driving growth and product innovation:

New product release in industry in 2011 increased by 16%. Chocolates have been experiencing the fastest growth, and sales are expected to

enlarge 13% between 2010 and 2015. Holidays, birthdays, chocolate are a flexible gift for many occasions. Seasonal and boxed assorted chocolates have been experiencing the fastest growth.

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Customer Service strategy:

Recruit and train the right people:

People with the right attitude are essential to building a successful customer service approach – “hire for attitude, train for skills” should be the maxim. Once in place, a planned training programmed in both job skills and people skills must be maintained. This is not an area for cost cutting if the market gets tough. Consider formal customer service qualifications for all staff.

 Happy Staff = Happy Customers:

Staff retention is crucial to your organization improving customer service excellence. Research shows clearly that staff stays when they are happy and respect the organization for which they work. Efforts should therefore be directed at recognition and development programmed to determine potential, and a well-though–out career plan structure.

Manage customer relationships:

Everyone loves special treatment. Once you have established a track record and some history about your customers, you can begin to identify and reward your most valuable ones. Perhaps you can offer a special discount or make a follow-up call to those who have needed recent repair work. There are many imaginative ways to reward customer loyalty.

 Recognize the importance of customer loyalty:

It is essential to keep the good customers you already have, and gain their loyalty. Loyal customers are active advocates of your organization, and they also tend to be more profitable, more interested in helping you improve your products and services, and more forgiving of your occasional mistakes.

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Welcome complaints:

Complaints are free market research and should be welcomed.

1) Ensure that you are hearing about all of them.

2) Resolve brilliantly the ones you get.

3) Stop them being repeated.

4) Learn lessons and pass these on to others. This might even lead to a short-term increase in complaints, but this is artificial – you always had them but didn’t know about it.

Utilize tools with caution – contact centers, CRM, and other tools:

If any of these things are being introduced primarily to reduce costs then it is doubtful whether real improvements in service levels will be gained, especially in the long term. If they are to be considered as an integral part of a strategy which is about improving customer service, one or more of them could be very useful. There are no quick fixes in improving customer service, but there can be some quick wins.

Know your customers:A formal method of tracking your customer interactions will help to identify the best customers, as well as those who have stopped visiting your business and need to be persuaded back.

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Behavior of luxury goods:A report released by UBS shows that last year, 50% of the world luxury revenue comes from Asia. Over half of the consumption of European luxury goods is from the tourists from Asian countries.

Large luxury groups have also witnessed strong growth in Asian markets. LVMH, Hermès, Gucci all posted better than expected results for 2011.

The "Luxury Goods Worldwide Market Study" recently released by Bain & Company has stated that China has already overtaken Japan as the 2nd largest luxury goods consumer only after United States. The report listed growth rate for US and Europe to be 12% and 6%, Asia 22%, China mainland 30%. For 2012, China is expected to further grow another 25%. On the other hand, European luxury companies still find India market hard to penetrate because of its lack of retail space and traditions.

Source: Author & source: ejournals.com

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Consumer buying behavior change according to the consumer interest and need e.g. the sale of moonshine in regular days would be the approximatley same but on special occasions or days sale increase because of them. Consumer buying behavior depend on product development and special occasions like Eid, Christmas, Mothers day, Valentines day. Moonshine will provide the innovative product with creativity on special occasions.

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Stakeholders:

Stakeholders are the people (or groups) who have an interest (i.e. a stake), in the outcome of a particular project. This normally refers to a project being undertaken by a company, and the stakeholders are normally from within that company; they could include internal clients, management, employees, administrators... etc.

Stakeholders of moonshine are.

Internal:

Directors Managers Employees Suppliers

External:

Governments Customer Banks Community Competitors

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Internal:Internal stakeholders are people who are already committed to serving your organization as board members, staff, volunteers etc.

Directors and Managers:

Manger and the director is the decision maker in the business, there point of interest is job satisfaction, job security, salary, share option and status.

Employees:

Their main point of interest is salaries, wages, job satisfaction and job motivation. They would have full authority on service quality and staff turnover. A policy will be composed to control these factors.

Suppliers:

Suppliers have the power of pricing, quality and product availability. To control all these things sweet art will do long term contracts and prompt payments.

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External stakeholders:External stakeholders are people who are impacted by your work as clients/constituents, community partners, and others. It is important to get the perspectives of both groups.

Government:

Government would be interested for tax receipts and either moonshine is operating legally or not. Governments have the power and influence over regulation, subsidies and taxation. Moonshine will get the membership of LCCI (Lahore Chamber of Commerce). Moonshine also gets register at SECP (Security and exchange commission of Pakistan). Moonshine will also get register at FBR (Federal Board of Revenue) to maintain the taxation.

Banks:

Bank can enforce loan covenants. They can also withdraw banking facilities. The basic intention of banks would be for interest, principal to be repaid and maintain credit rating. Moonshine will

get register and maintain the credibility at PACRA (The Pakistan Credit Rated Agency Limited).

Community:

It is clearly mentioned in company’s goal that company will fulfill the environmental responsibilities and it is company responsibility to create vibrant, healthy and sustainable community. For environmental protection company will design recyclable packaging for products. Company will also be a part of CSR (Corporate Social Responsibility) in which company will collaborate with WWF Pakistan to create awareness regarding water pollution because pure water would be the next big issue in Pakistan after energy crisis.

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Financial Prospects:

Costing:Pricing:

Moonshine will work out two pricing strategies. The first one is cost based and second one is competitor based. By following cost based pricing Moonshine will charge the cost of product plus margin of 20% to 30%. On occasions e.g. Eid, Christmas, Valentine’s Day and Mother’s Day etc. Moonshine will try to maintain the same margin on these days because in Pakistan during these days the price of everything raised in contrast with other countries like in Europe they offer special discounted prices on these days. Moonshine will also keep in mind competitor based pricing to compete the competitors in the market.

Financing:

LCG will finance Moonshine by using their retained earnings. The expertise of loans from different banks will also be used by LCG to finance Moonshine.

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Documentation needed by Moonshine:Moonshine needs documentation to operate effectively. For internal documentation Moonshine implied in the ISO 9000 series of international standards. The major classifications of needed documents include marketing and administrative material.

Marketing Material:Moonshine will design written material to provide customers with information about the company and their products and services. The purpose is to make the public aware of what is available, as well as to help to sell the products. This material includes:

Website

Promotional Brochures

Social media

Advertisements

Marketing material would be done in slick publications, but also promotional material and catalogs would be distributed via electronically.

Marketing specialists and advertising copywriters would traditionally do the marketing writing. Online marketing documents will write by professional technical.

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Advertisement:Moonshine commercial will be place on well know music news and drama channels e.g. Geo, Express News, Ary News, MTV Pakistan, AAG, HUM etc. Different ads will also place in Sundays and times magazines.

Administrative material:Moonshine needs documents to cover various administrative requirements. Such material includes:

Annual reports

Organization manuals

Moonshine will put most of this material online, on the Web.

Annual reports:Annual reports will summarize the financial position of Moonshine for governmental agency, nonprofit community organization and general public. Moonshine will also get Audit internally and externally as well.

Organizational manuals:Moonshine’s organization manuals provide guidance to employees or customers about organization. They include policies and procedures manuals, style and identity guides and benefits guides.

Moonshine will also put an online version of organization manuals on their intranet. And for that an expert in HTML would be require.

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Ethical responsibilities: Moonshine will operate in an ethical way is by treating the environment with respect,

for example by treating waste and improving energy efficiency and recyclable packaging for products.

Moonshine will improve energy efficiency because this will cut down operating costs for the business.

The ethical marketing of Moonshine involves not only finding out what people like, but what is good for them. It involves being honest about the ingredients included.

Moonshine will never act in an unethical way to raise profits. It is usually found out and gains a lot of unfavorable media publicity. This leads to a decline in custom, revenues and profits.

Moonshine will concentrate on long term view of managing relationships with stakeholders and this will actually create long term growth and higher profits for the business.

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Occupational health and safety (OHS): Having the right attitude towards the safety of your workers, contractors, customers and the public is an important first step. Moonshine will engage state and territory OH&S agencies for advice and kits on how to incorporate safety management into business operations. Under occupational health and safety (OH&S) Moonshine is obliged to provide:

Safe premises.

Safe machinery and materials.

Safe systems of work.

Information, instruction, training and supervision.

A suitable working environment and facilities.

If a worker is injured during the employment, they're entitled to make a workers' compensation claim. Accidents usually need to be recorded in an accident log for insurance purposes. It's Moonshine responsibility as an employer to ensure that:

Maintain current workers' compensation insurance. Protect yourself and your workers from financial hardship in the event of a workplace

injury.

Bibliography:

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Philip Kotler, Gary Armstrong, Veronica Wong and John A. Saunders. Principles of Marketing (11th edition). (2008)

The chocolate industry - http://www.icco.org/about-cocoa/chocolate-industry.html, accessed July 2012Chocolate consumption - http://www.sfu.ca/geog351fall03/groups-webpages/gp8/consum/consum.html, accessed July 2012

http://www.callcentrehelper.com/the-top-10-customer-service-strategies-27041.htm accessed July 2012

http://www.marketingmagazine.co.uk/news/231327/ accessed July 2012

http://www.marketresearch.com/just-food-v2647/Global-Review-Premium-Chocolate-Forecasts-2008724 accessed July 2012

http://www.franchisehelp.com/industry-reports/chocolate-industry-report accessed July 2012

http://www.candyindustry.com/articles/global-chocolate-market-worth-98-3-billion-by-2016 accessed 2012

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