! !! Bsc in Management

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“Vamonos Ragazzi ”

Business Plan !!Supervisor: Angelo Arcuri Dadheesha Hewage

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Academic year:2014-2015

Abstract!

‘Vamonos Ragazzi’ is a travel agency specialized in organizing tours to Sri Lanka

primarily aiming at the younger generation of Italians, by providing customized and

down payment systems. This thesis provides a critical analysis of the proposed

business plan for the company, from a management point of view. The project was

originated by the writer’s passion in tourism, and his observance of the rich potential

in Sri Lanka being a country with an economy, which is highly influential on tourism.

To this end, the writer has also witnessed a tremendous enthusiasm within the Italian

community on visiting tropical destinations on holidays.

A thorough literature review was conducted by critically evaluating previous work

done by authors with regards to this subject using several management frameworks.

This framework was developed as a platform for the writer to ameliorate his abilities

and to gain further knowledge on the field. Moreover, the evaluation of the work in

the literature review was later used to identify potential strategies to be included in

‘Vamonos Ragazzi’s’ business model.

Furthermore, theoretical models such as forecasting models for future predictions,

SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis and PESTLE

(Political, Economical, Socio-cultural, Technical, Legal and Environmental) Analysis

were employed for attaining qualitative data in order to build the strategy for the

business plan. To this end, quantitative analytical methods such as focus customer

surveys were conduction to evaluate and comprehend the feasibility of the business

plan in the Italian context.

A set of concluding recommendations was made for ‘Vamonos Ragazzi’ to achieve

its financial and other objectives. The principal aim of this thesis was to evaluate the

business plan and to put it into practice and implement it so it would be a worthwhile

venture.

Table!of!Contents!

1. Introduction ……………………………………………………………... 1

2. Literature Review ………………………………………………………... 2

3. Research Methodology …………………………………………………... 5

3.1 Proposed Research Methodology. …………………………………… 5

3.2 Justification of Methodology. …………………..…………………… 6

3.3 Proposed Analysis. …………………..……………………………… 7

3.4 Ethical Conduct. ……………………..……………………………… 7

3.5 Forecasting Models..………………………………………………… 7

3.6 SWOT Analysis. …………………..………………………………... 12

3.7 PESTLE Analysis. …………………..……………………………… 15

3.8 Questionnaire. …………………..…………………………………... 18

4. Findings and Analysis..………………………………………………….. 22

4.1 Tourism Demand..……………………………………………….…... 22

4.2 Questionnaire Analysis..………………………………………….…... 29

5. Conclusions and Recommendations.……………………………………….. 37

6. Bibliography and References..…………………………………………….. 38

Appendix..………………………………………………..………………... 40

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1. Introduction

Purpose of the Study The writer would like to mention this as the mission statement of his undergraduate program, as

the writer have lived and studied in Italy the tourism industry’s attraction is beyond most people

expectations in the historical, cuisine and cultural enrichment that is delivered to the tourists is

impeccable. With this image restored in the writers mind, had the pleasure of hearing the word

“paradiso”(paradise) whenever Sri Lanka was mentioned, but only a handful have the knowledge

or picture about the Island, thus it sparked to my mind to start up a travel agency just for Sri

Lanka for the Italian market and then to move to the European market using the theoretical and

practical aspects that i have learned within my course to apply to this project.

Industry and Company Overview After a 30-year lasting civil war that ended in 2009, the tourism industry in Sri Lanka has

boomed during the five years, although during the civil war tourism experienced a major

downfall due to the security reasons. But as today, there are a lot of up and coming hotels and

boutiques which gives the tourists to enjoy vacations at reasonable costs, which includes a lot of

backpacking and budget tourists in Sri Lanka.

‘Vamonos Ragazzi’ is the proposed name for the travel agency that is intended to start, the

names states it all, ‘Vamonos Ragazzi’ (Lets go guys) will provide customized holiday travel

packages with down payment plan systems that is designed and targeted for the younger and

adultery generation in the Italian society in the aim of selling a tropical life experience for

Italians in Sri Lanka, not only just a holiday in South Asia, in which where the writer has come

up with very strong research question “What would characterize ‘Vamonos Ragazzi’ as a travel

agency, to travel in Sri Lanka for Italians as the preferred tropical destination ? Why “ that

will give an idea of the possibility of launching this business plan or not which leads the writer to

seek answers to questions like: Is the business profitable, is their a potential market for Sri

Lanka, Are people willing to go to travel agencies.

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2. Literature Review The exhaustively established overview of the Sri Lankan tourism industry enabled the definition

of the overarching research objective of this thesis. The enactment of an extensive theoretical

framework with regards to the scope of the report is perceived as a foundation for the research

and the analysis. In order to achieve this, a comprehensive review of the literature from previous

work done in regards to the research field of this thesis was conducted. The primary purpose of

this chapter is to appraise the theoretical background of this research field, and build a platform

to conduct further research and analysis, in order to support the objective of the thesis. Modern

day industries seek sustainability and business stability over its life cycle. The most efficient way

to achieve this in a start-up company, is by incorporating a solid research module for the

evaluation of the business models to assist the decision making process to decide whether the

business idea should be taken to the implementation stage.

To have a better understanding in the tourism sector when estimating the demand for tourists, the

time series model, which is related to the forecasting models theory, will be analyzed to

understand the effect of quantitative data methods. In the other hand would be to link it up with

the strategic planning to identify the macro environmental (external analysis) and the internal

analysis by using SWOT analysis and the PESTLE analysis framework provided by other

authors and critically evaluated.

According to Haiyan Song and Lindsay Turner, 2006 forecasting methods have been used to

calculate the tourism demand by researchers for many reasons. One of the main points to pick up

are that the demand for tourism has been the cornerstone for many business decisions and other

related industries that are linked to it, not to be elaborating but in estimating the demand for

tourism has been the business profitability factor. This showed me a theoretical aspect in order to

start up the research process in the proposed idea, by statements given by the authors, which

gives a better understanding in laying the platform to begin with.

With this theoretical aspect in accordance with my objectives that lead into the a practical

analysis of measuring the demand for tourism project carried out by Tea Baldigara for

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forecasting tourism demand in Croatia (2013) paraphrasing Box & Jenkins from 1970; the

mission of using time series model in analyzing the forecasting future is based on past and

present data. With the help of these models in the process of forecasting for demand tourism time

series has the ability to explore certain trends and patterns such as seasonality for example. This

data found allows another insight where the writer will be able to use this model in the future for

this paper, after gathering not only the theory but also a practical example as a previous proposed

project in 2013.

Tea after carrying out his findings and analysis in his conclusion mentioned that his objective

was to use forecasting models as a quantitative method to analyze the demand for tourism in

Croatia. The value of using the various methods in the time series to provide data for the tourism

demand for the future that out of the many methods used from Naive approach to linear trend

that the double moving average method proved the best forecast for tourist nights spent in

Croatia for two future periods, furthermore he calculated the data from 1991-2012 for 2013-

2014. However in evaluating the theories and findings by Tea it gives an adherent point of view

of as to which methodologies that has been used to calculate the tourism demand for Croatia, that

which provides here another factor that the use of quantitative data methods for carrying out

tourism analysis with the use of secondary data to predict the future as in the beginning

mentioned it was the cornerstone that defines the business profitability, but this from one side is

true, from another could be that they have not clearly mentioned the effect qualitative data

analysis methods.

As a part of the strategic planning process of any new business or an existing one there are

fundamental approaches in defining there environments before implementing the objectives of a

given plan, just as the famous scholar Michael Porter stated that “The essence of formulating

competitive strategy is relating a company to its environment.” And to measure the environment

in a qualitative perspective the SWOT analysis can be used as the theoretical model.

In the decision making process the tool is utilized to survey options it is very straightforward, In

a given business environment; external or internal it is one of the most key beginning points for

the combustion of strategic planning (2013,Eric H. Kessler). The author also mentions that the

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SWOT stand amongst the most predominant devices in the fast changing of the market and gives

us knowledge into creating and keeping up beneficial fit between the a business venture and its

surroundings.

According to Eric (2013) the model has been useful in assessing countries and even industries;

more recently in the academic side it has grown its branches to assessing political correctness to

time management for builders. Furthermore states that in a lot academically published journals

and textbooks students are advised to use the SWOT analysis framework to analyze an

organization in the first stages of defining and defending strategic mechanisms. This pairs up

with what M. Porter stated before and gives the opportunity to as how to simply develop a

business idea to put things into place, in the case of tourism industry collecting information and

gaining a wider knowledge as the first steps to move forward.

When entering any market there must be a solid understanding of the macro environmental

knowledge, also the known as the external analysis and can be seen by a study made by Marina

Gregorić using the “PESTEL analysis of tourism destination in the perspective of business

tourism comparing two nations”, Croatia and Qatar.

The PESTEL analysis was in order to find the differences between the two countries in order to

gain political, economical, sociological, technological, environmental and legislative in forms of

business tourism, and by using this analysis it was had been able to monitor the global behavior

of tourism and demand: macro indicators of the industry (2014, Marina Gregoric). This gives the

opportunity that enables me to compare Italy and Sri Lanka as two parts in processing part of the

business, thus the study made by Marina is an academic work that by gathering and concluding

two countries, which is involved in the business, is very important.

To wrap the review, in the conclusion of the research study performed by Marina, stated the

comparisons and improvements that can be made between Qatar and Croatia in their tourism

business analysis by both quantitative and qualitative data, this gives the writer that sheer study

between two countries in this case strictly between Sri Lanka and Italy can be performed.

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3. Research Methodology

3.1 Proposed Research Methodology

The most celebrated physicist of the 20th century, Albert Einstein once said, “Not everything that

can be counted counts, and not everything that counts can be counted“ Distinguishing the value

of the above statement, this thesis employs two types of research methodologies namely

‘Qualitative’ and ‘Quantitative’, for the purpose of analyzing the feasibility of ‘Vamonos

Ragazzi’s’ business plan.

3.1.1 Qualitative Research Methodology !The concept of this methodology focuses on pre-built theoretical models using qualitative data

such as words, pictures or objects to perform the analysis. According to Nkwi, Nyamongo, and

Ryan (2001, p. 1), “Qualitative research involves any research that uses data that do not

indicate ordinal values”. This methodology enables the composition of simple functional

definitions that can be utilized in life cycle decision-making activities.

Qualitative research enables thorough enquiries into the soft systems of the business, such as the

ideologies of customers, how they feel about the external world and how does their actions affect

the external world and more importantly to understand why such variations from person to

person, society to society exist, which tends to be beneficial in business decision making. This

methodology helps ‘Vamonos Ragazzi’ to understand in-depth a particular behavior of their

potential customers and the barricading reasons that keep the customers away from changing

their behaviors. Moreover, Qualitative research does not focus on providing the users with

statistically resilient findings, but more of a pictorial illustration of the system.

The predominant sources of this research methodology includes,

• Observations

• Focus groups

• Theoretical models

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3.1.2 Quantitative Research Methodology !According to Saunders M. (Research Methods for Business Students, 2009), quantitative

research is stated “As a synonym of for any data collection technique (such as questionnaire) or

data analysis procedure (such as graphs or statistics) that generates or uses numerical data”.

This means that the analysis is done using numerical values, things are being quantified and the

then those variables are documented by using statistical processes to complete the research in

this form. This method gives a measure of the quantity of the soft system and its features that

could be integrated in a statistical analysis to derive results. Looking at the context of ‘Vamonos

Ragazzi’, this method enables to determine quantitatively, how many of the potential customers

would support or oppose the business case and how strong is their support or opposition.

The predominant sources of this research methodology includes

• Surveys

• Interviews

3.2 Justification of Methodology !As any profound researcher, the writer has decided to use a mix of both methodologies

mentioned in the previous chapter, in order to balance the system because even in a logical sense

if one side of the weighing balance is more than the other its not right. Therefore in order for

‘Vamonos Ragazzi’ to conduct this project by the use of surveys, focus interviews and other

formulas a mixed methodology will be used. Below are some of the reasons as to why a mixed

design strategy is preferred over a single strategy, according to Bryman (2006):

• Triangulation: The mix of quantitative and qualitative research data in so they can be mutually

corroborated.

• Enhancement: Adding to one set of findings in gathering more data.

• Instrument development: The use of qualitative data to develop a questionnaire measure.

• Illustration: By using qualitative data to to illustrate quantitative findings.

• Completeness: Using qualitative and quantitative research for a comprehensive account.

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3.3 Proposed Analysis !In management field a variety of theoretical methods can be used in order to analyze the

feasibility of the project and to make the critical decision making whether to put forward the

project or not. The purpose is to examine some of these theories and by testing them, to

understand which of those are most reliable and how it will help the writer to analyze from a

management point of view in proposing this business plan for ‘Vamonos Ragazzi’.

3.4 Ethical Conduct !The collection and presentation of the data used in detailing this business plan was granted

permission and were rigorously reviewed considering the general ruled with regards to

plagiarism and copyright. Withstanding as a bachelors student of (Bsc) in Management course,

the writer does not have a specialized knowledge as well as the possibility of including and

developing all the theories that will be required to put inside the business plan of this

presentation. Therefore the data and the theories introduced in this thesis were hand picked to be

the most relevant to this business plan, hence taken into consideration.

3.5 Forecasting Models !This thesis employs forecasting models incorporating historical data to predict and contrast on

the direction of future trends (Investopedia, 2014). Companies and managers to keep a track of

their corporate vision as the business continues through various phases use forecasting.

Moreover, the forecasting models helps the corporate management to identify and estimate the

margins of error, that’s crucial in arriving at realistic predictions for sustainable decision-making

for the future. In this project the writer has decided to employ some elements of the time series

forecasting models to determine and predict the tourism demand for Sri Lanka by the amount of

Italians that has visited in the past. This gives the opportunity to draw an answer to one of the

objectives of the research. Furthermore, all the data gathered and collected are from the

published documents of the Sri Lanka Tourist Development Authority’s annual statistics reports,

which are accurate and mostly likely to be up to date for two years period used in all four

forecasting methods used in the analysis of this thesis. Moreover, the writer has also incorporated

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secondary data in to predicting the future, which gives a double advantage in thoroughly

understanding the tourism demand in Sri Lanka.

What is Time Series? It is a chronological sequence of observations at a particular variable.

These observations are only based on values from the past, assuming other factors that were

influential in the past and the present and determined to be potentially influential as the industry

continues in the future. The following are some of the methods from many methods that will be

used in this project.

3.5.1 Naive Approach !This approach assumes that the demand pattern of tourism in the future periods to be the similar

to the demand patterns in the most recent periods. For example if the number of tourists who

visited Sri Lanka in 2010 is one million, it is likely that in 2011 the numbers will be more or less

same to one million. In order to understand the applicability of this method in the context of this

thesis, its advantages and disadvantages are compared in Table 1 below.

Advantages Disadvantages

• Mostly effective and efficient in the case of steady demand or slow changes; when the demand is not met, the value will not loose (2014, Angelo Arcuri, International Business Decision Making, PowerPoint Slides).

• It has no virtual costs involved and comparatively easy to prepare due to the nonexistent data analysis and simple to understand (2012,W.J Stevenson, Operations Management).

• It provides the baseline to integrate with other models.

• It doesn’t have the characteristic of providing accurate forecast results (2012,W.J Stevenson, Operations Management).

• Not suitable in the long run for forecasting.

• Not suitable with data that is trended, although the writers reason using this method is due to the cost and time effective mechanism this model has and however if resulting accuracy is acceptable the approach deserves serious consideration.

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3.5.2 Moving Averages !This is the most commonly used forecasting model and works best when time series fluctuates

around the constant base level. This method could also be defined as a series of arithmetic

means. Moving averages are promising in providing the overall impression of data over time.

There are two type of moving average methods, the simple moving average (SMA) and the

weighted moving average (WMA) methods. This thesis utilizes both of these methods to forecast

the future demand for tourism.

Simple Moving Average (SMA)

The simple “moving average forecast uses a number of the most recent actual data values in

generating a forecast” (2012,W.J Stevenson).

Figure 1: Simple moving average formula

Where,

Ft: Forecast for time period t MAn: Period moving average At-i: Actual value in period t-i n: Number of periods (data points) in the moving average Table 2 below compares the advantages against the disadvantages of using the simple moving

average (SMA) method for predicting the future demand.

Advantages Disadvantages

• Has low computational cost. • Ease of applying the method. • Has the ability to provide accurate

forecasts. • Fast in providing forecasts.

• The trend is not handled very well. • If the data has seasonal of cyclical

variations it fails to produce accurate results.

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Weighted Moving Average (WMA)

It is quite similar to the moving average method but in the weighted moving average method you

adjust the moving average method by assigning weights to the most recent data. Below is the

formula used to calculate it.

Figure 2: Weighted moving average formula

Where: Wt: Weight for the period t Wt-1: Weight for period t-1, etc At: Actual value in period t At-1: Actual value for period t-1, etc

Table 3 below compares the advantages against the disadvantages of using the weighted moving

average (WMA) method for predicting the future demand.

Advantages Disadvantages

• It is Easy to interpret and understand. • It is simple to learn and apply. • It is cheap to run. • It can provide stable forecasts and

provides them fast. • The response time to rapid changes in

the pattern. • The model can produce more accurate

forecasts than a SMA model if applied to a trended series.

• Ignores complex relationships in data. • Increasing the value of “n” makes the

forecast less sensitive to changes • The methods also require quite an

amount of historical data. • It doesn't forecast well due to the delay

between actual outcomes and forecast.

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3.5.3 Exponential Smoothing Method !Exponential smoothing method is the third and the final method employed in this thesis this for

forecasting the demand of Italian tourism for Sri Lanka. This method is a bit more complex

compared to the naïve approach and the two moving average approaches. According to W.J

Stevenson, exponential smoothing method is a ‘sophisticated weighted averaging method that is

still relatively easy to use and understand. Each new forecast is based on the previous forecast

plus a percentage of the difference between that forecast and the actual values of the series at that

point’. The formula to calculate the demand forecast as per this method is detailed below.

Figure 3: Exponential Smoothing Method formula

Where:

Ft: Forecast for period t Ft-1: Forecast for the previous period (i.e., period t-1) α: Smoothing constant (percentage) At-1: Actual demand or sales for previous period

Table 4 below compares the advantages against the disadvantages of using the exponential

smoothing method for predicting the future demand.

Advantages Disadvantages

• It’s easy to learn and apply, produces accurate and fast forecasts plus has a relatively low computational cost.

• It needs much more smaller amounts of data to be stored compared to moving averages methods.

• By altering the value of the smoothing constant it can be able to fit the model properly in different circumstances.

• The data is taken as a whole and doesn't need cut off points like in the moving average methods.

• Normally produces forecasts that will lag behind the trend.

• Because there is a smoothing constant, the forecasts that will be generated are sensitive to its specification.

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3.5.4 Limitations of the Models !In order to effectively use the above-discussed forecast models, their limitations should be well

understood. The main limitations of these models as observed by the writer are listed below.

• The moving average and exponential smoothing models only forecast one period ahead.

• Some of the missing data in the tourism statistics might have to be estimated in order to

calculate the future using these models.

• Time is the only independent factor considered, as other dependent factors are not taken

into consideration, which limits the quality of the output of data that will be used.

• Due to the time limitation and lack of expertise knowledge in advanced forecasting

models, the writer has only been limited to use these simple models to generate the

tourism demand of forecasts using the advanced accuracy methods thought in an

undergraduate program for management studies.

• The accuracy of forecast results can be improved if more variables could be added to the

independent variables.

3.6 SWOT Analysis

3.6.1 Introduction

In any business existing or startup should have a strategy to start off with, and in building this

strategy there is methodological process where everything depends on the objective of the given

project, as in this particular scenario what makes Sri Lanka the preferred tropical destination for

Italians to travel. In answering this part of the question the first the writer has been able to

understand and analyze by applying SWOT analytical tool for identifying and categorizing the

macro and the micro environments; the external and internal analysis of the business in that

helped gaining more knowledge in this strategic planning process. The importance in

understanding these four elements (strengths, weaknesses, opportunities and threats) is that it

helped in getting towards building up the sustainable competitive advantage against the existing

market. However as any theoretical model or tool it has its limitations as well as its advantages,

the writer has chosen this method due to its simplicity and ease of use.

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Strengths Weaknesses

• Specialized travel destination.

• Highly focused on one subject.

• Low start up cost.

• New dimension of travelling introduction.

• Down payment plan for customers.

• Customized travel packages for youth

budget.

• Lack of reputation - New to the industry

• Lack of clear strategic allies

• A lot of generalized travel agencies

• Hard to convince to change - the local

community.

Opportunities Threats

• Tourism growth rate in Sri Lanka increasing

• International tourism trends indicate that

fastest growing tourist cities in the world as

of 2015, Colombo, Sri Lanka.

• Being partnered with other agencies.

• Building connections through clients for

future investments.

• Niche market- growth through personal

influence in Italy.

• Personal influence; Networks

• Established travel agencies.

• Existing competitors.

• Political and legal issues between Sri Lanka

and Italy.

• Slow economic progress in Italy; reluctant to

travel overseas.

• Market can be too concentrated.

Table 5: SWOT Analysis

3.6.2 Advantages !Using SWOT analytical framework has a number of positive aspects in evaluating the external

and internal part of the business. This tool can be applied to ‘Vamono’s Ragazzi’s’ organization,

organizational unit and the investor. It has helped in the project to develop a number of

objectives as mentioned in table one, for example the opportunity to being partnered up with

other agencies and getting outsourced services from similar companies in the field; elaborating

this point is that the writer believes in the win-win type of businesses meaning that both parties

of the business can achieve their goals through combination of their work.

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The ability to locate an objective and to conduct the brainstorming session by the writer by

identifying the external and internal factors that could be favorable and unfavorable to achieving

the goal. Furthermore, the tool can be used for the future in the cases of going on to implement

research on opportunity analysis or in the case of business development; sets the baseline. The

ability to have multi-level analysis can be gained by viewing each of these elements in the

SWOT, one by one or combined together. For example if we consider the threat of legal issues

that might effect in opening up the business, it might alert the writer that the proposed business

has to be carefully checked before implementation.

As pictured above and the diagnosis is shown, simplicity is one main factor that the writer has

considered in using this tool; it doesn't even need training or technical skills for instance in

explaining it to potential investors this image can clarify a lot in a short amount of time. Plus

anyone else in the industry can also understand it easily, which not to repeat the importance of

having the brainstorming session in analyzing the four elements.

Lastly to mention, this tool doesn't involve any cost; in the financial perspective of course and

their wasn't any need of hiring an external consultant or extensive training that required to get

results from this model.

3.6.3 Disadvantages !The fact that by using this model, one of the main drawbacks is the when observed it can

oversimplify the extent of strengths, weaknesses, opportunities and threats that ‘Vamonos

Raggazi’ is facing. The classification of these four elements and the lack of ability to go deep

down into the strategic management sector in forming and building up the strategy is slacking.

For instance by using the Porters five forces or resource based view analysis of the company that

are a part of the SWOT analysis when broken down into external and internal sections, these two

frameworks can give a better understanding in getting to an sustainable competitive advantage

for example in the long run for the company.

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Since the analysis is about the four individual elements of strengths, weaknesses, opportunities

and threats, by using the tool the writer hash to been able to rank these factors another versus

within any list, meaning there is no weighing factors in the SWOT and as an outcome the

objective of the factors can be determined.

Moving on to another drawback that was witnessed during this research is the lack of control of

these elements; meaning that these elements are not under the control of the management, which

includes inflation levels, changes in the legislation done by governments. Another limitation is

that this methodology gives a subjective analysis; when stating about the business decisions that

will be taken in the business for the future they must be reliable, comparable and relevant data.

However the SWOT the collection of data that has been done above reflects on how the writer

collected the data and participated in the brainstorming session plus the data can be out of date in

quick amount of time.

3.7 PESTEL Analysis !

3.7.1 Introduction !In order to have a deeper understanding of the macro-environmental side of the business the

writer, which also could be stated as a root the branches out from the opportunities and threat

elements from the SWOT analysis, PESTEL framework was used to analyses the external

marketing environment section of the this start up project. It will be applied to analyze to gain

more knowledge in understanding the changes that shapes the business environment in Italy.

This framework that consists of the six elements that include political, economical, socio-

cultural, environmental and legal, furthermore allows also in the collection of certain important

data through governmental and non-governmental acts and statistics that will not only give the

business a secure baseline for what is background going to be about but the depth factor that was

mentioned in the SWOT analysis has been covered by the writer. The difference that in this

framework it is was able to brainstorm the big picture the SWOT didn't allow the writer to get to

a better image of the external environment.

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3.7.2 Political !The country has arrived to a more stable political situation even though it isn't as stable it should

be, this fact was on of the main reasons to propose a project in Italy due its past political

confusion and chaos the country had witnessed,a reason is that since most businesses are

favoured by politicians and has the power to gain what the investor or owner has. This leads to

the corruption factor in the country: according to the transparency international 2015 website that

stated the data and ranking position of 177 countries corruption level measure by the CPI

(Corruptions Perception Index), Italy ranks 69 out of 177 and is the highest in western Europe.

Also the political relationship between Sri Lanka and Italy, both countries being member of

NATO and the United Nations, secures the baseline due to the fact that it will involve directly

with Italian citizens or Europeans involved in the business. From the government side, Vamonos

Ragazzi has to obtain many permits & authorizations from the chamber of commerce in the state

of Tuscany.

3.7.3 Economic !There has been slow improvement in the country’s economy after the 2008 crisis that hit Italy

along with the other european nations such as Greece and Spain for example. The positive news

to attain is that from an article written in “The Florentine”; the english newspaper in Florence,

Tuscany in the May 2015 issue had some good viewpoints to consider. The article’s introduction

was “Tuscany is beginning to see the light at the end of the financial crisis tunnel”, going on with

to summarize some of their data: most business closures are down 20 percent since the end of

2014 and the first trimester of 2014, the businesses rate of bankruptcy has been decreased by 51

percent, to close up their findings; innovative start-up companies that were established in urban

areas and university areas have been the top sector for the growth of jobs.

This shows that there is movement in the flow of money in the state of Tuscany and the society

having money to spend is an advantage for Vamonos Ragazzi. Furthermore the company will be

funded with

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3.7.4 Socio-Cultural !The target market and the name translated is more towards the younger generation of Italy, so it

was important to understand and focus on their behaviors towards this kind of business. The

customers targeted are enthusiastic and adventurous travellers looking to explore the other side

of the world. This also helps to build up other connections through the writers influence in the

city and networks.

3.7.5 Technological

Having a basic infrastructure level for the company that will be later developed according to

project approval basis. In todays society almost everyone uses a smartphone and has the access

to the World Wide Web (WWW), knowing this as a fact the development of a website and an

application for the smartphone is a part of the strategic process main ways of marketing the

service. Not to forget the use of social media that has a mass effect on most businesses today

emerging and existing such as Facebook, YouTube, Twitter, Instagram and so on will be used in

the enhancing the external environment of the business. This involves the use of GoPro as a viral

way to use the technological factor in play.

3.7.6 Environmental !The environmental situation is quite normal as the country has four seasons in general and it

hasn't resulted in any disasters to be aware of much since a while, also providing pretty ambient

working style.

3.7.7 Legal Enforcement of the employment law, both paid and self-employed contracts will be made as in

any start up business. The other one would be the data protection, which includes the copyright

laws showing that has already been patented.

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3.7.8 Advantages

• Helps to reduce impacts and effects in the reduction of potential threats in the external

environment.

• Simple and easy framework to work it, very informative and gives the writer a broader outlook

on the external environment of the business.

• It has cross-functional skills and expertise.

• It creates the environment that facilitates ‘Vamono’s Ragazzi’ in identification and exploiting

new opportunities.

3.7.9 Disadvantages

• In a way it succumbs where the gathering of too much information that might forget the

objective of the tool, which is identification of issues so that action could be taken.

• The assumptions normally form the baseline for the data used above, which makes any

decisions that will be made based of data subjective.

• It also can oversimplify information that will be made in the decision making process for

‘Vamonos Ragazzi’.

3.8 Questionnaire

3.8.1 Introduction

The primary source of data collection method that the most important quantitative methods in the

research that is conducted by the writer, giving an insight through real collection of fresh most

recent data through a questionnaire in the form of a market survey. This quantitative method of

collection of data gives the prominent answers to the research questions that have been stated

throughout the paper, meaning giving the writer to analyze the decision of investment to be made

in this industry. The survey will be an online survey built through ‘SurveyMonkey’ online

website for creating survey’s, that will generate the data; having the ability to share the survey

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through a web link and social media such as Facebook makes it much more convenient for the

writer. This primary data collection method will help the writer in the concluding part where to

invest or not to invest in the situation of ‘Vamonos Ragazzi’, having a variety of questions

allowing not only to understand if the investment is possible but also allowing the writer to

explore other dimensions for the future and a learning process. Below is a copy of the

questionnaire that will be displayed and sent online.

3.8.2 ‘Vamonos Ragazzi’ Survey

Q 1) What is your age range / Quale la tua fascia d’età?

a) 18-25

b) 25-35

c) 35-45

d) 45+

Q 2) What is your gender / Quale è il tuo sesso?

a) Male

b) Female

Q 3) How frequently do you apply to a travel agency to arrange your vacation / Quanto volte fai

la richiesta ad un'agenzia di viaggio per organizzarti la vacanza?

a) Always / Sempre

b) Often / Spesso

c) Sometimes / Qualche Volta

d) Rarely / Raremente

e) Never / Mai

Q 4) How often do you visit a travel agency websites for booking a trip / Quanto volte controlli il

sito di un'agenzia di viaggio per prenotare un viaggio?

a) Always / Sempre

b) Often / Spesso

c) Sometimes / Qualche Volta

d) Rarely / Raremente

e) Never / Mai

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Q 5) These are some expected qualities of a travel agency. Please rank them from “1” to “5”.

Note that: “5” stands for the most important and “1” for the least important quality. /

Qui ci sono delle qualità previste per un'agenzia di viaggio. Per favore classificale dall"1 al

5.Nota che il 5 è il più importante mentre l'1 è quello meno importante.

a) Good Communicative Practices / Buone pratiche comunicative

b) Trustworthiness / Attendibilità

c) Professional Knowledge / Conoscenze professionali

d) Friendliness of Staff / A cordialità del personale

e) Fair Cost / Costo equo

Q 6) What type of a holiday would you like the most / Che tipo di vacanza ti piacerebbe di più?

a) All inclusive / Tutto incluso

b) Customized / Personalizzato

Q 7) Would you like to explore another culture during your holiday / Ti piacerebbe conoscere

una nuova cultura durante la tua vacanza?

a) Yes / Si

b) No

Q 8) If Yes (Question 7 above), Which tropical destination would you like to explore? Note: '5'

stands for 'most interested', and '1' stands for 'least interested’. /

Se si (7 domande qui sotto), quale tra queste destinazioni tropicali ti piacerebbe esplorare? Nota:

il 5 è il 'più interessante' mentre l'1 è quello 'meno interessante'.

a) East and West Africa / Est e ovest del africa

b) South East Asia / Sud-est asiatico

c) South Asia / Sud del Asia

d) Central and South America / Centro e Sud America

e) Caribbean / Caraibi

3.8.3 Explanation of the Survey

Question 1 - In any standard survey it is the question to ask; the demographic question. This

helps in the market segmentation of the developed project, allowing the writer to categorized and

work or gain information on the target market, which is mainly younger generation.

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Question 2 - Effect on the cultural values, roles and beliefs of gender within the society. Once

again a standard question. For example some questions may look more important to women than

the others.

Question 3 - To know if actually people will visit an agency to put it quite simply. Also the

options are to get a deeper understanding of putting up a travel agency is :worthwhile or not by

giving the person four choices once again to break down results for a better and clear analysis.

Question 4 - Using and developing a website without having the need to go to a travel agency as

the second option which was followed up by question number 3, mentioning if they actually

wanted to go to the travel agency. Moreover if built how many times they would go to a travel

agency website.

Question 5 - To understand how people view the internal environment of the typical ‘travel

agency’ scenario. What are the limitations and characteristics and how do people see them

nowadays.

Question 6 - Understanding the preference of what the market desires. The breakdown of market

to analyze how many prefer which type of package they want, from this to get information that

will help in the analysis section, which combines, with other coherent questions leading to the

conclusion.

Question 7 - To know if people in Italy want to travel elsewhere except Italy; exploring the rest

of the world.

Question 8 - Most important question of all the others as the last one, it pretty much sums an

important factor where the people in Italy want to travel if they were given the chance to visit a

tropical region or continent. Sri Lanka being a part of south Asia gives the ability to gain

information of how many people want to go there, plus have given the option in the order of

ranking to get a deeper analytical explanation of how the market prefers and where it falls.

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3.8.4 Advantages !• No travelling

• Easy to answer - online through Facebook and web link to get faster responses.

• It doesn't cost anything - free online software to create and generate results.

3.8.5 Limitations !• Limited amount of time to do the questionnaire

• Amount of people answering is less than 100 people, cant get a clear understanding of what

and how results can change if more people did the survey with the time factor.

4. Findings and Analysis

4.1 Tourism Demand

In order to find out whether Italians visit Sri Lanka, the writer had to find out using secondary

data through the official Sri Lanka Tourist Development Authority’s annual statistics reports (see

appendix figure 9 & 10) and by using this data to get a forecast for a two years period 2015 &

2016 using the time series models. This, to state is a very important piece of finding; using

secondary data to provide primary data. Using the four models that was mentioned in the

methodology the writer has found and forecasted the data.

4.1.1 Naive Analysis

The data below shows us that there has been gradual increasing in the amount of tourists arriving

in Sri Lanka after 2009, this is because of the ending of the civil war that tourism in the country

started to boom, however the naive approach is an important tool in the event of unmet demand

or arrival of an economic imbalance to predict and gives the writer as a baseline to work with

rest of the models. Moreover using the model shows the in the year 2015 has a predicted 21,116

amount of tourists visiting the country.

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Year Actual Naive

2006 12.424

2007 11.451 12.424

2008 9.126 11.451

2009 7.514 9126

2010 11.423 7514

2011 13.527 11.423

2012 15.871 13871

2013 17.982 15871

2014 21.116 17.982

2015 21.116

Table 6: Naive Analysis

Figure 4: Naive Analysis

0.

5.5

11.

16.5

22.

27.5

2005 2008 2010 2013 2015 2018

Actual Naive

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The above is the graph displayed stating the increase in tourism since 2010, this model gives the

writer the base to where, their is a market which goes to Sri Lanka for vacation and has increased

since the last five years.

4.1.2 Moving Average Analysis

The writer used a two-year moving average to calculate the forecast the tourism demand. The

data shows that there is positive sign in where the demand has increased. The amount of tourists

forecasted using this method for 2015-2016 are 19,549-20,333. The forecast for 2016 was based

on the forecast of 2015: shows that there is an increase so the writer has got an answer to the

baseline of the research question.

Year Actual 2 year moving average

2006 12.424

2007 11.451

2008 9.126 11.938

2009 7.514 10.289

2010 11.423 8.320

2011 13.527 9.469

2012 15.871 12.475

2013 17.982 14.699

2014 21.116 16.927

2015 19.549 19.549

2016 20.333

Table 7: Two year moving average analysis

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Figure 5: Two year moving average analysis

The graph shows that there has been increasing number of tourists in the coming years for 2015-

2016 in the forecasted data; this shows that there is a demand for tourism even with this method.

Using this method it also shows the writer the smoothing factor of the graph if you happen to

notice the redline.

4.1.3 Weighted Moving Average Analysis

By using the two as the weight to forecast the tourism demand, the writer used two as a weight to

get the presented data, accordingly as shown below for the years 2015 and 2016 has an increase

in tourism. During the two years that was forecasted, there is positive data: 20,071 for 2015 and

20,419 expected tourists for the year 2016.

0.

5.5

11.

16.5

22.

27.5

2005 2010 2015 2020

Amou

nt o

f Tou

rists

Years

2 Year Moving Average Forecast

Actual 2 year moving average 

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Year Actual 2 Year Weighted Moving Average

2006 12.424

2007 11.451

2008 9.126 11.775

2009 7.514 9.901

2010 11.423 8.051

2011 13.527 10.120

2012 15.871 12.826

2013 17.982 15.090

2014 21.116 17.278

2015 20.071 20.071

2016 20.419

Table 8: Two year weighted moving average

Figure 6: Two year weighted moving average

0.

5.5

11.

16.5

22.

27.5

2005 2010 2015 2020

Amou

nt o

f Tou

rists

Years

2 Year Weighted Moving Average Forecast

Actual 2 Year Weighted Moving Average 

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The graphical display above shows the smoothing effect of the weighted moving average with

the red line and the increase for the forecasted two-year period and the potential to grow higher

in the next five-year period.

4.1.4 Exponential Smoothing Analysis

By using the exponential analysis the writer shows that the demand for tourism forecast using

alpha as 0.40 in this scenario.

Year Actual Forecast

2006 12.424

2007 11.451 12.424

2008 9.126 12.397

2009 7.514 12.306

2010 11.423 12.173

2011 13.527 12.152

2012 15.871 12.190

2013 17.982 12.293

2014 21.116 12.451

2015 12.691 12.691

2016 12.691

Alpha 00.40

Table 9: Exponential Smoothing Analysis

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Figure 7: Exponential Smoothing Analysis

4.1.5 Critical Evaluation of Forecasting Models

After the findings and analysis of tourism demand for two periods of time, the weighted moving

average method produced the highest demand for the two years: for 2016 estimating the tourism

to be at 20,419. By this we can state that it has been the best method for analyzing and finding

our forecasts although other methods also showed us the increment in the tourism. However this

gave us the answer to the baseline of the research question that there is a possibility of a higher

potential market and it has been increasing since the past four to five years if you observe the

trends in the graph as well.

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4.2 Questionnaire Analysis

The following analysis will be based on the market survey that was presented and distributed via

a web link and social media (Facebook) to the writer’s colleagues and other anonymous Italian

people. These primary data collection findings will help the writer in reaching out for the final

conclusion and recommendations of the developed business plan that departs with the objectives

of the research question using the SWOT and PESTEL analysis models that was discussed in the

previous chapter. To further proceed with the analysis and findings there were 62 responses that

the writer received after sending out the market survey.

Figure 8: Age Ranges

The above graph shows the age ranges of the correspondents sorted in descending order, out of

the 62 only one person has skipped this question hence the data will be only comprised of the 61.

The results were that between the ages ranges 18-25 there were 27 responses (44.26%), 25-35

there was 22 responses (36.07%), 35-45 there was 13.11% and for 45+ there was 4 (6.56%) (See

appendix figure 1). From this data the writer can analyze a positive outcome that 49 responses

were from the expected target market making it 80,33% which is the writers target market is

high, answering the business model of targeting young travellers in Italy.

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Figure 9: Sex

After gathering the age ranges data, the writer in order to gain more detail of the market between

the sexes conducted this question, although in this scenario 3 correspondents out of the 62

skipped this question, so the statistics provided will only consist a percentage out of 59 responses

as it is also displayed in the above graph (figure 9). The results were 33 (55.93%) responses

came from female and 26 (44.07%) from male (see appendix figure 2). This data shows that

majority of travellers or wanting to travel are female; this is a vague assumption only the writer

has taken and things can always change but it clears the cloud to understand a little when it

comes to marketing the product in this case.

Does the Italian community want to travel using a travel agency and what are the

characteristics of a travel agency

As a main section of this survey was to find out whether people are willing to go to a travel

agency to arrange their vacation when they want to travel, as a result for the question number 3,

the writer received the following responses out of five choices given. In this question all the 62

participants had answered and is represented in the graph (figure 10) below according to

descending order, they were rarely 20 (32.26%) people went to travel agencies, 20 (32.26%)

people never went to travel agencies (see appendix figure 3): this shows that more than half of

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the population has stated that they are quite resistant in going to a travel agency although there is

the possibility to grab “rarely” market always because in todays fast changing society and is the

potential market.

Moving on to the positive results that came out of this question, the results of the rest to the

question were: 14 (22.58%) people sometimes went to travel agencies, 7 (11.29%) people went

often to travel agencies and 1 person (1.61%) always went to travel agencies to book their

vacation to an agency (see appendix figure 3). When adding up all off all these three sections

making it 35.48%(22.58%+11.29%+1.61%) which the writer believes its his market to start off

with, plus with the potential to attract the “rare” market in the future.

Figure 10: Percentage of people going to travel agency to book their vacation

After finding the amount of people that goes to travel agencies to book their vacation, now the

writer cut through to another root to find out how often people use travel agency websites to

book their holidays and all of the 62 participants answered (question number 4). The results a

graphed (figure 11) below according to descending order, and the statistics were: mostly people

rarely used- 25 (40.32%) and 14 (22.58%) people never used (see appendix figure 4). Once

again more than half of the population that answered doesn't have much interest in using the

agency’s website even to book their holiday but their is a potential market in here as well who

rarely use it.

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In the positive side of the market where choosing the three other options (sometimes, often and

always) as the writers market. The results were: sometimes 13 (20.97%) people visited travel

agency websites, often their was 7(11.29%) people and 3(4.84%) people always visited travel

agency websites to book their holiday (see appendix figure 4). If we add up the target market

with these three combined, which the writer believes in this case that its his market it will be

37% Of the market is willing to visit a website to book their travel.

Figure 11: Percentage of people visiting a travel agency website to book their holidays

Finally to understand the qualities of a travel agency, so that the writer can understand the pros

and cons, which will enable to not only improve in the future but also see, what is lacking or

slacking inside an agency conducted this question (Question number 5). The participants were

asked to rank the position of the characteristics from 1-5 (5 being most important and 1 being

least) which is shown in the graph (figure12) below and 61 out of 62 participants answered this

question. The results was calculated to achieve an average for each category out of 5:

Friendliness of staff came at the highest with 3.36, Professional knowledge 3.18, Good

communicative practices 3.16, Trustworthiness 3.00 and the last one ranked as fair cost which

got 2.33 out of 5 (see appendix figure 5).

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Figure 12: Qualities of a travel agency by ranking

This shows that one of the main reasons people don't visit travel agency or their websites is due

to the fact that they cost higher that other places where you can plan your trip, however in the

case of ‘Vamonos Ragazzi’, the writer is planning to have an down payment methodology for

Italians to travel to Sri Lanka, which was one of the strengths mentioned in the SWOT analysis

section. By this factor taken into consideration and findings, it can be one key factor that will

help maintaining a sustainable competitive advantage.

Does the targeted market (young Italians) want to travel to Sri Lanka as a tropical

destination and which type of holiday experience they prefer

In order to understand the customers need, the writer came up with two solutions in testing the

business idea, where ‘Vamonos Ragazzi’ concentrates more on the customized holiday package

rather than the usual all inclusive travel packages most travel agencies offer to customers. So in

order to confirm this assumption the writer had asked the participants which type of holiday

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package they would prefer. All of the participants had answered the question: 23(37.10%)

wanted an all inclusive package while 39 (62.90%) wanted a customized travelling package (see

appendix figure 6) and the graphical display (figure 13) of their choice is below.

From this information we can combine with the previous question of fair cost being the lowest

factor and probably one of the reasons people don't go to travel agencies as much as they used in

the past because they offer all inclusive in most cases and its expensive, so this is an advantage

for ‘Vamonos Ragazzi’.

Figure 13: preferred holiday package

Moving on to the core part of this business plan and answering one of the elements in the

research question the writer decided to ask the participants if they would like to experience

another culture during their vacation, although it can sound quite obvious to receive “yes” as an

answer from most participants there could have been some people who would be reluctant to

this. That is why question number 7 was asked where all of the participants answered it and

shows below in the graph (figure 13) the bar chart of results, the numerical data was: 62 (100%)

wanted to travel to another culture (see appendix figure 7), so its confirmation that everyone in

Italy wants to explore another culture during their vacation.

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Figure 14: Percentage of people willing to experience another culture for their holiday

After identifying that everyone in the market wants to travel, the writer wanted to know where

the people would like to travel if they were offered a tropical vacation for their holiday, so in

order to know and understand where the market wants to question number 8 was added as the

last one. They were given five options as travel destinations and was asked to rank them by their

priority making 5 as the most interested destination and 1 as the least interested destination, the

graph (figure 14) below gives the data in descending order and only one participant skipped this

question. The results were as follows out of 5: East and West Africa with 3.48, South East Asia -

3.34, South Asia - 3.30, Central and South America - 2.56 and the Caribbean coming in at last

with 2.36 (see appendix figure 8).

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Figure 15: Classification of tropical destinations according to preference

Sri Lanka which is with the South Asian market comes in as the third most preferred tropical

destinations by Italians and the fact of South East Asia coming in as second is another potential

market that the business can focus on to pull them towards the South Asian region. However

after East and West Africa having 19(31.15%) people who ranked them as the most interested

place, South Asia came in second place with 16(26.67%) people who preferred as the tropical

destination (see appendix figure 8) is another positive factor to extract from the survey created.

From the gathered data we can analyze that there is a market in which tourism for Sri Lanka can

be promoted.

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5.0 Conclusion and Recommendations

Within the course of this dissertation for the proposed business plan, to begin with the writer

analyzed few management theories and applied them to the case of ‘Vamonos Ragazzi’ and after

applying these theories into practice in the findings and analysis section was able to draw certain

conclusions. Using the forecasting models (time series analysis) the writer was able get

secondary data that helped in gaining forecasts for the future; the tourism demand for Sri Lanka

by forecasting the amount of tourists for a two year period of time in which here the writer can

state their is growing market since the last five years (2010-2015) and it seems increasing, so this

concluded that the travel business is present hence has the potential to make Sri Lanka as a

preferred tropical destination.

After this to test the business model of having a travel agency the writer conducted a market

survey. From the results presented their were a large percentage who selected Sri Lanka as their

first choice of tropical destination and around 30% of the target market was willing to use a

travel agency website in order to book their travels, but only a few went to the agency that is

because of the high cost normal agencies give to the customers, although ‘Vamonos ragazzi’s’

competitive advantage is that they provide customized travel packages to the young Italian

travellers where they have the ability to have down payment plan system. From this strength and

others drawn from the SWOT analysis it is possible to conclude that ‘Vamonos Ragazzi’ as a

travel agency in Italy for developing tourism in Sri Lanka and as the preferred tropical touristic

destination is definitely possible. Furthermore using the strengths to cover the weaknesses and

the opportunities to cover the threats in the future to improve certain areas such as to enhance

and attract more people to actually go to ‘Vamonos Ragazzi’ and in using their website as a tool

to increase the visibility of the product being offered.

However just like in any business the writer knows its not logical to achieve sky high profits in

one months time, therefore with steady progress its possible, just like the old saying ‘if there is a

will, there is always a way.

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6.0 Bibliography and References

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Haiyan Song and Lindsay Turner (2007) 'Tourism Demand Forecasting', in L. Dwyer (ed.) International

Handbook on the economics of Tourism. UK: Edward Elgar Publishing, pp. 89-90. (Accessed: 25th May

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Roger L. Martin. (2014). Three Quick Ways to Improve Your Strategy-Making. Available:

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Saunders, M., Lewis P. and Thornhill, A.. (2009). Formulating the research design. In: Research methods

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Nkwi, P., Nyamongo, I., & Ryan, G. (2001). Field research into socio-cultural issues: Methodological

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ALAN BRYMAN (2006) 'Integrating quantitative and qualitative research: how is it done?', Qualitative

Research, 6(1), pp. 97-113 [Online]. Available at:

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Forecasting Definition | Investopedia. 2015. Forecasting Definition | Investopedia. [ONLINE] Available

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https://www.transparency.org/cpi2013/results. Last accessed 20th May 2015.

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http://www.sltda.lk/sites/default/files/Annual_Statistical_Report-2012_new.pdf . Last accessed 29th May

2015.

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Appendix

Figure 1

Figure 2

Figure 3

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Figure 4

Figure 5

Figure 6

Figure 7

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Figure 8

Figure 9

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Figure 10