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BUSINESS PLAN FOR TANGO INTERNATIONAL FABRICS COMPANY

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TABLE OF CONTENTS

Executive Summary…………………………………………………………………….1

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

2.0 The Business Model Canvas ……………………………………………………….1

2.1 Customer Segments…………………………………………………………1

2.2 Value Proposition……………………………………………………………2

2.3 Customer Relationships……………………………………………………...2

2.4 Channels……………………………………………………………………..2

2.5 Minimum Viable Product (MVP)……………………………………………3

2.6 Key Activities………………………………………………………………..3

2.7 Key Resources……………………………………………………………….3

2.8 Key partners………………………………………………………………….3

2.9 Revenue and cost structures………………………………………………….3

3.0 Market Feasibility………………………………………………………………..…...4

4.0 Technical Feasibility………………………………………………………………….5

5.0 Financial Feasibility………………………………………………………………....6

5.1 Sources of Financing………………………………………………………....7

6.0 Human Feasibility…………………………………………………………………….8

6.1 Manpower requirements……………………………………………………...8

6.2 Organizational growth strategy………………………………………………9

References ………………………………………………………………………………10

Appendices………………………………………………………………………………11

Business plan for Tango International Fabrics Company 1

Executive Summary

This paper discusses the business plan for a Tango International Fabrics Company.

The firm is a newly formed enterprise in Australia focusing on the sportswear segment of the

sports industry. Tango is a prospective entrant and therefore the business plan features the

chronological steps that the management of the facility has to pursue in order to realize a

successful entry and operation in the nearly monopolistic sportswear market. The policy

features the firm’s relative position by exploring the feasibility of the market, finance,

technology, and human resource. Moreover, the business model canvas is applied to assess

the company’s internal activities relating to various parameters that have an influence on its

success. Generally, the company has adequate resources and strategies to enter the market

1.0 Introduction

Companies undergo a series of protocols before entering a new market. The procedure

is more complex for newly formed firms that have limited information about the market. In

this regard, Tango International Fabrics Company denotes of the newly formed firms in

Australia that seeks to enter the sportswear industry. The sector has been existent for a long

time during which other similar companies have been operating. Tango faces an immense

challenge of breaking the monopolistic situation in the industry as imparted by Adidas, Puma,

Nike, Under Armour, and Reebok. Therefore, the company’s business plan should be

comprehensive and effective enough to enable the company to thrive in the industry.

2.0 The Business Model Canvas

2.1 Customer Segments

Tango International Fabrics Company will focus on the all age sets across the globe

by providing sporting costumes for all events. This will cater for the rising demand for

sporting gears due to the commercialization of games and their important role in body fitness


for the aged population.However, a great focus will be on the youthful sports participants

since the cohort is highly vigorous and economically commanding.

2.2 Value Proposition

The company will provide high-quality cotton-made sporting costumes to the

customers. This is aimed at solving the global shortage in supply of customized cotton made

attire for all age sets. The problem shall be solved by introducing a diverse product portfolio

which includes gloves, jackets, socks, caps, racing tracksuits, scarfs, and shorts.The

diversified product line shall cater for the uneven availability of the attire in the local and

global markets.

2.3 Customer Relationships

We wish to extend our cordial relationships with customers. The two parties will co-

exist mutually with the customer given a larger berth of choice and power than the firm. This

will be replicated across the three customer segments in order to ensure equal treatment and

customer service. However, the young and the aged cohorts will receive specialized guidance

on the choice of the products and their use. Therefore, a customer service desk will serve to

guide all clients hence making them part of the key stakeholders in the firm. The costs

incurred will be considered as part of operation costs.

2.4 Channels

Our customers will be reached through an intensive local and international network of

distribution centers, personal contacts, and through the company website. These channels will

ensure adequate access of the products by the clients irrespective of their geographical

location. The website will be designed to include an interactive interface through which the

customers will contact the customer care direct via messages and Skype. A contact list will be

created in order to keep the clients updated about the new products in the market. The


diversified channels of communication would enable the company to create close links with

the customers (Downes & Mahon, 2012).

2.5 Minimum Viable Product (MVP)

The threshold features of the first product will entail a comprehensive articulation of

the customers’ need to stretch, move freely, and add little weight to the players. A

combination of these characteristics will represent the preliminary quality and service of

products that shall guide the customers in making recommendations.

2.6 Key Activities

Tango International Fabrics will engage in vigorous market research to identify the

available supply gaps. This will be accompanied by a comprehensive marketing strategy to

ensure clients get acquainted with the firm’s product. Revenue allocation will be distributed

proportionally among the production, distribution, and product promotion activities.

2.7 Key Resources

The firm will have at its disposal the financial, human, intellectual, and physical resources.

2.8 Key partners

The company will collaborate with business consultant agencies, research institutions,

and product distribution firms for effective information gathering, market research, and

product delivery.

2.9 Revenue and cost structures

The current sports industry serves a wide variety of customers. On average, the clients

have been purchasing at the base price through a variety of payment methods. The retail

business has been more convenient for the buyers than wholesale thus generating a

significant amount of revenue than the latter. However, more revenue shall be utilized to

finance material procurement and the production process.


3.0 Market Feasibility

According to Barringer (2012), a market feasibility study determines the extent to

which the target market can support a company’s operations. The global sports market has

been growing steadily. Between 2015 and 2017, the average revenue increased from 46.5

USD to 90.9 USD (Nauright and Pope, 2017). This statistics show a 95% increase in the

revenue hence predicting a positive response of Tango Fabrics to the prevailing market

situation. The international sports wear industry has partially explored since few firms

specialize in providing the cotton-made sports kit. For instance, Adidas and Nike specialize

mostly in the manufacture of sports shoes. This leaves a huge gap for supplying full training

kits, scarfs, gloves, and muffins for players in cold regions of the globe.

The existing sportswear supplies have global networks and online portals that avail

the products to the spatially distributed customer bases. Chaffey and Ellis-Chadwick (2012)

describe this as the core marketing and sales strategies used by companies to reach out to the

international market. However, some customers occur in the locality within the Australian

market. This provides a readily available customer base especially for cricket sport that has

been gaining popularity in the continent. The internationalization of Tango Fabrics Company

will encounter the complexities of conforming to the external business factors. The different

government regulations for the multiple target markets will pose a challenge in accelerating

the entry of the firm into the market. Moreover, the sports industry has been dynamic with

new products and sports being introduced spontaneously. Therefore, Rocco and Pisnik (2014)

suggest a progressive market research for an entrant in order to provide unique products that

have little or no close substitutes.

The Sports Wear Industry is a partially buffered business venture due to the existence

of long-serving brand portfolio for globally reputable companies. Firms like Adidas, Nike,

Reebok, Puma, and Under Armour have successfully maintained reputation and significant


market share in the industry (Tong & Su, 2014). Therefore, the customer loyalty on the

specific brands hampers the acceptability of new supplies from a new entrant such as Tango

Fabrics. The company faces an enormous task of draining the existing client devotion to the

existing products. This could be achieved through the unique product design that attracts the

tastes and preferences of the consumers. On a different note, the monopolistic nature of the

sports industry poses barriers to the free entry of new investors. The most influential

companies dictate the pricing of the products by applying the economies of scale in order to

disadvantage the new entrants or small-scale investors (Crabbe, 2014). This strategy inflates

the costs of operation while minimizing profits hence triggering their exit. On a similar note,

the entry of Tango International Fabrics Company is likely to face similar embargoes.

4.0 Technical Feasibility

The current status of Tango Fabrics impairs its ability to own sophisticated support

technologies. Therefore, the process of development will involve the use of subcontractors

for services that require advanced technical intervention. This would ensure that the company

survives in the absence of the technical team. However, the less technical responsibilities

shall be executed by the firm’s own team. The production process shall rely on in-house

manufacturing since the company has an adequate resource base to facilitate production. This

will be effected by mobilizing departments to play their respective responsibilities to foster

the manufacturing process.This will minimize the cost of operation due to the lack of the

need to delegate production process to an external party.

Sales and distribution will be done at the company level. The respective department

shall formulate and implement a product promotion strategy that will help in popularizing the

brands to the customers. Furthermore, the department of sales and marketing shall map the

strategic locations of the distribution points with respect to the outcomes of a pre-conducted

customer distribution survey. The company website will be managed partly by the


information technology department and the sales and marketing unit. This will allow in-house

communication with the customers across the world through an online support center. As a

supplementary responsibility, external marketing representatives shall be contracted during

the first financial year to conduct product promotion. This approach shall be vital in helping

the management to set a benchmark for the successive fiscal years.

Cotton, which describes the main raw material, will be locally available from Gwydir,

Namoi, and Macquarie,Murrumbidgee, Lachlan, Barwon, and Darling (Downes & Mahon,

2012). The input shall be supplied by the company’s production department. As at present,

the firm has constituted a highly-skilled human resource for effective operation and

management.Obviously, Tango Fabrics will be subjected to industry standards and

regulations, and intellectual property, environmental liability and social responsibility.

Therefore, the firm will seek compliance to the set standards and commitment to its social

responsibility. Technologically, marketing and production processes are dynamic in the

sportswear industry. The company will design a development strategy to keep its operations

in phase with the changes.

5.0 Financial Feasibility

Tango International Fabrics aim at making sustained financial progress through its

diversified management strategies and product portfolio. The following table presents the

expected returns for a successful 5-year period.

Table 1: Tango’s projected revenue for the next five years

Financial Year Projected Revenues (USD)2018 40000002019 42900002020 49100002021 50100002022 5420000The estimated growth in returns is forecasted througha qualitative analysis of the potential

performance of the business growth strategies against the prevailing market conditions. The


possible embargoes to smooth business operations are weighed against the potential returns if

the restrictions were maintained at maximum. Therefore, the figures represent the least

accruable revenues for the stated period. Based on market research,the sales volume is

projected to appear as follows;

Table 2: Tango’s projected unit sales and the respective cost

Financial Year Units sold Cost of units sold2018 432,991 4,128,0002019 511,400 4,801,0002020 559,300 5,400,0002021 567,000 5,710,0002022 601,000 5,800,000Furthermore, the market research gives an estimated price per unit for all brands.

Table 3: Estimated cost per unit sale of Tango’s brands

Brand Unit Cost per Unit ($US)Jacket 1 540Gloves 1 32Socks 1 30Caps 1 21Tracksuit 1 660Scarf 1 24Short 1 45In view of the statistics, the total expected revenue is estimated at 5.5 billion USD.

5.1 Sources of Financing

The principal source of finance will be:

1. Individual savings

2. External borrowing

3. Plowing back profits

The sources have varying probabilities of availing the needed financial resources.

Individual savings have a guaranteed certainty as signed by the company’s pioneers.

However, external borrowing may be unreliable due to the bureaucratic processes involved.

Furthermore, the need for initial assurance and guarantors complicate the simplicity of the

process. Re-investing the accrued profits spells significant uncertainty since this source will


rely on the expected performance of the company. Therefore, priority is given to the

individual savings as the chief source of finance.

Table 4: Indicators of the attractiveness of the venture

Indicator Average rate for three yearsGross Margin 25-40% or aboveNet profit margin 15-20% or aboveReturn on Investment 10% and abovePayback 2 years or lessBreak even 2 years or less

6.0 Human Feasibility

6.1 Manpower requirements

Tango International Fabrics require a rigorous marketing and communication team

that will enhance the firm’s sales. The technical team will provide solutions to sophisticated

problems as well as conducting effective market research for new products. The firm will be

managed by the owners at the departmental level. However, an overall facility manager will

be recruited to foresee the performance of the entire organization. The best employees will

beselected through a vigorous interview. Compensation for extra hours of work and exclusive

expertise shall be done through a performance appraisal program. Furthermore, motivation

will be achieved through the promotion and issuance of awards. This is expected to inspire

the workers to work relentlessly towards the prosperity of the company.


Figure 1: The organizational structure of Tango International Fabrics Company

6.2 Organizational growth strategy

Tango will pursue diversification strategy as the main organizational growth plan. This

strategy entails the expansion of the production line or venturing into improving brand

portfolio in order to gain competitive advantage over the close competitors(Nath,

Nachiappan, & Ramanathan, 2010). The success of the strategy will trigger changes in the

organizational structure by creating more managerial posts for the newly created units. This

will offer a variety of career paths for the workers ranging from managerial to supervisory

roles. With reference to quality assurance and control, the sales and marketing department

will incorporate the responsibility into its structures.

Managing director

Sales and Marketing Customer care Production

Departmental managers

Research and development

Communication (IT)


References

Barringer, B., 2012. Entrepreneurship: Successfully Launching New Ventures, (2012).

Chaffey, D. and Ellis-Chadwick, F., 2012. Digital marketing. Pearson Higher Ed.

Crabbe, M., 2014. Manufacturing Measures. In Myth-Busting China’s Numbers (pp. 103-

119). Palgrave Macmillan UK.

Downes, S. and Mahon, R., 2012. Successes and challenges of managing resistance in

Helicoverpa armigera to Bt cotton in Australia. GM crops & food, 3(3), pp.228-234.

Nath, P., Nachiappan, S. and Ramanathan, R., 2010. The impact of marketing capability,

operations capability and diversification strategy on performance: A resource-based

view. Industrial Marketing Management, 39(2), pp.317-329.

Nauright, J. and Pope, S., 2017. The twenty-first-century Sports World: global markets and

global impact.

Rocco, S. and Pisnik, A., 2014, September. Developing a Conceptual Model of Relationship

between Market Orientation and Design Orientation. In 5th EMAC Regional

Conference, University of Economics in Katowice, Poland (pp. 177-184).

Tong, X. and Su, J., 2014. Exploring the personality of sportswear brands. Sport, Business

and Management: An International Journal, 4(2), pp.178-192.


Appendices

Appendix 1: Tango’s estimated startup costs

Startup parameter Cost ($US)Land 34,500License 21,200Training 54,900Equipment 144,900Communication 100,000Premises 120,000Distribution networks 100,000Miscellaneous 94,300Consultation 78,900Infrastructure 120,000Summative Cost 868,700

Appendix 2: Profit and Loss Statement for Tango International Fabrics Company

Tango International Fabrics CompanyProfit and Loss statement FOR THE YEAR ENDING DEC 2018, 2019, and 2020 2018 2019 2020Revenue 890840 918650 966100Operational costs 757020 778460 779010Operating profit 133820 140190 17400Other expenses -11000 -32680 33000Other accruals 1260 1540 1760Net operating profits 124080 109050 14810

Financial expenses 7250 7720 7990Financial income 1010 1350 1540Returns before tax 117840 102680 157620

Corporate tax paid 33060 33670 33970Income: Contracted marketers 9880 80080 8990Profit for the year 94670 149040 175400

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