Business Development Plan: Ready Meal service

Business Plan on Ready Meal

Executive summary This business plan is prepared based on the idea of establishment of a business of ready meal in UK. Based on the future prosperity of this market (Ashgate.com, 2014) it is decided to establish a business that is recognized as “BhanchaGhar”. Providing the best quality of food to the UK people in their home as they want is the mission of BhanchaGhar. After conducting a feasibility research it is found that the overall feasibility of the business is quite satisfactory. Actually, the business will establish the product lines of ready meal of Nepalese, Japanese, and other Asian Cuisine in the UK market by conducting local small and medium sized stores. By his way people can get variation in their tastes. Raw materials of the production will be provided from the local Nepalese and Indian wholesaler. In London the food development centre will be established. In case of providing foods, they mainly focus on the delivery of quality and healthy foods with rationale price. Again, BhanchaGhar offers its services to its customers throughout 24 hours seven days in a prompt manner. In this concept, it decided to have a good distribution channel to provide services its customers. The target market of BhanchaGhar is the male customers and higher income level customers as they prefer more ready meal. Based on the undertaking of both researches, that is primary and secondary research of the plan, it is assessed that the business proposal is viable (Finch, 2010). So successfully it can be implemented. The business proposal of BhanchaGhar fits with the glove in that case, by going target market demographics, their preferences, food habit as well as pricing expectation. With the establishment of suitable operating process BhanchaGhar may sustain in the market which is saturated and competitive in nature.

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Table of Contents Executive summary......................................................................................................................... 2 List of figures .................................................................................................................................. 6 List of tables .................................................................................................................................... 8 1. INTRODUCTION ...................................................................................................................... 9 1.1 Rationale ............................................................................................................................... 9 1.2 Mission.................................................................................................................................. 9 1.3 Vision .................................................................................................................................. 10 1.4 Design and structure of the report ....................................................................................... 10 1.5 Relevant models and Information sources used.................................................................. 10 1.6 Assumptions........................................................................................................................ 10 1.7 Timescales for achievement ................................................................................................ 11 2. BUSINESS CONCEPT ............................................................................................................ 11 2.1 Description of Business Concept ........................................................................................ 11 2.2 The Concept Statement ....................................................................................................... 12 2.2.1 The Product / Service ................................................................................................... 12 2.2.2 Target Market............................................................................................................... 12 2.2.3 Value Added ................................................................................................................ 12 2.2.4 Specific Features .......................................................................................................... 12 2.2.5 Who Is Involved ........................................................................................................... 12 2.3 The Window of Opportunity............................................................................................... 13 3. Feasibility research of the business plan ................................................................................... 13 3.1 feasibility research plan ...................................................................................................... 13 3.2 primary and secondary data needs ...................................................................................... 14 3.3 research methodologies ....................................................................................................... 15

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3.3.1 Data collection methods ............................................................................................... 15 3.3.2 Sample description ....................................................................................................... 16 3.4 feasibility research .............................................................................................................. 20 3.4.1 Product/ service feasibility........................................................................................... 20 3.4.2 Industry feasibility ....................................................................................................... 25 3.4.3 Market feasibility ......................................................................................................... 27 3.4.4 Organizational feasibility ............................................................................................. 30 3.4.5 Financial feasibility...................................................................................................... 31 3.5 ambition Vs Ability......................................................................................................... 33 4. THE BUSINESS MODEL........................................................................................................ 34 4.1 Business Model ................................................................................................................... 34 Key partner ................................................................................................................................... 34 Key activities ................................................................................................................................. 34 Value proposition .......................................................................................................................... 34 Customer relationships ................................................................................................................. 34 Customer segments ....................................................................................................................... 34 Key resource ................................................................................................................................. 34 Channels ....................................................................................................................................... 34 Cost structure ................................................................................................................................ 35 Revenue streams............................................................................................................................ 35 4.2 Core Strategy ...................................................................................................................... 35 4.2.1 Business Mission ......................................................................................................... 35 4.2.2 Product/Market Scope .................................................................................................. 36 4.2.3 Basis of differentiation ................................................................................................. 36 4.3 Competitive Advantage & Sustainability ........................................................................... 36 4|Page

4.3.1 Competitive Positioning............................................................................................... 36 4.3.2 SWOT analysis ............................................................................................................ 37 4.3.3 4.4

Superior Value Proposition ..................................................................................... 38

Resource Needs .............................................................................................................. 38

4.5 Partnership Network ........................................................................................................... 40 4.6 Value Deliverables to the Customers .................................................................................. 40 5. BUSINESS PLAN .................................................................................................................... 40 5.1 Approaches to deliver the business model .............................................................................. 40 5.1.1 Industry, Company and Products ..................................................................................... 40 5.1.2 Key to Success ................................................................................................................. 41 5.1.3 Market .............................................................................................................................. 42 5.1.4 Marketing Plan ................................................................................................................. 42 5.1.5 Design and Development Plan ......................................................................................... 44 5.1.6 Management Team........................................................................................................... 45 5.1.7 Operations Plan ................................................................................................................ 46 Supply Chain Management ................................................................................................... 46 Operating Process ................................................................................................................. 47 Equipment ............................................................................................................................. 47 5.2 Business Concern and Risk..................................................................................................... 48 5.2.1 Risk identification ............................................................................................................ 48 5.2.2 Risk management ............................................................................................................. 49 5.3 Critical Success Factors (CSF) ............................................................................................... 49 5.4 Issues for Sustainability .......................................................................................................... 50 5.5 Financial Plan.......................................................................................................................... 50 5.5.1 Financial Objectives......................................................................................................... 50 5|Page

5.5.2 Start-up Costs ................................................................................................................... 51 5.5.3 Assumptions..................................................................................................................... 52 5.5.4 Break Even Point Analysis .............................................................................................. 52 5.5.5 Projected Profit/Loss ........................................................................................................ 54 5.5.6 Projected Balance Sheet ................................................................................................... 55 5.5.7 Projected Cash Flow ........................................................................................................ 55 5.5.8 Contingency Planning ...................................................................................................... 56 5.6 Exit Strategy............................................................................................................................ 56 5.7 Viability of the plan ................................................................................................................ 57 Reference ...................................................................................................................................... 57 Appendix ....................................................................................................................................... 60 Appendix 1 ................................................................................................................................ 60 Appendix 2 ................................................................................................................................ 60 Appendix 3 ................................................................................................................................ 62 Appendix 4 ................................................................................................................................ 63 Appendix 5 ................................................................................................................................ 64 Appendix 6 ................................................................................................................................ 65 Appendix 7 ................................................................................................................................ 65 Appendix 8: Demographic question ......................................................................................... 66 Interview questions ................................................................................................................... 67

List of figures FIGURE 1: PROCESS OF MARKETIGN RESEARCH ...................................................... 14 FIGURE 2: GENDER OF THE RESPONDENTS ................................................................. 17 FIGURE 3: RACES OF THE RESPONDENTS .................................................................... 18 6|Page

FIGURE 4: AGE OF THE RESPONDENTS ......................................................................... 18 FIGURE 5: EDUCATION LEVEL OF THE RESPONDENTS .......................................... 19 FIGURE 6: ANNUAL INCOME LEVEL OF THE RESPONDENTS ............................... 19 FIGURE 7: MARITAL STATUS AND PROFESSION ....................................................... 20 FIGURE 8: EXPECTATION OF THE CUSTOEMRS ......................................................... 21 FIGURE 9: CUSTOMERS PREFERENCE ............................................................................ 21 FIGURE 10: BUYING BEHAVIOUR OF THE CUSTOEMRS .......................................... 22 FIGURE 11: MALE RESPONDENTS BEHAVIOUR .......................................................... 23 FIGURE 13: INCOME LEVEL AND THE UYING BEHAVIOUR ................................... 24 FIGURE 12: FEMALE RESPONDENTS BEHAVIOUR ..................................................... 24 FIGURE 14: INDUSTRY LIFE CYCLE ................................................................................ 27 FIGURE 15: CURRENT MARKET POSITION .................................................................... 28 FIGURE 16: LOYALTY OF THE CUSTOMERS TOWARDS THE MARKET .............. 28 FIGURE 17: WHIC ONE SHOULD BE DEVELOPED IN THE READY MEAL ........... 29 FIGURE 18: CAPITAL STRUCTURE ................................................................................... 32 FIGURE 19: FORECASTED SALES VOLUME .................................................................. 33 Figure 1: competitive strategy of bhanchaghar ............................................................................. 37 FIGURE 2: CHOSEN SOURCES OF RECOMMENDATION TO SELECT THE READY MEAL ........................................................................................................................... 43 FIGURE 3: ORGANIZATIONAL STRUCTURE OF BHANCHAGHAR ........................ 46 FIGURE 4: STARTUP CAPITAL OF BHANCHAGHAR .................................................. 51 FIGURE 5: CAPITAL STRUCTURE OF BHANCHAGHAR............................................. 52 FIGURE 6: TOTAL BREAK EVEN ANALYSIS OF BHANCHAGHAR ........................ 53 FIGURE 7: MONTHLY FORECASTED PROFIT OR LOSS OF BHANCHAGHAR .... 54 FIGURE 8: YEARLY FORECASTED PROFIT OR LOSS OF BHANCHAGHAR ........ 54 FIGURE

9:

PROJECTED

TOTAL

NONCURRENT

ASSETS&

EQUITY

OF

BHANCHAGHAR ...................................................................................................................... 55 FIGURE 10: PROJECTED CASH FLOWS OF BHANCHAGHAR ................................... 56

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List of tables TABLE 1: DEMOGRPAPHIC POSITION OF THE SAMPLE ........................................... 16 TABLE 2: CUSTOEMR BUYING BEHAVIOUR IN DIFFERENT GROUPS ................ 22 TABLE 3: ORGANIZATIONAL POSITION OF BHANCHAGHAR ............................... 30 TABLE 4: START UP CAPITAL ............................................................................................ 31 TABLE 5: FORECASTED SALES VOLUME ...................................................................... 32 TABLE 6: AVERGAE PROFIT PERCENTAGE .................................................................. 33 Table 1: summary of bhanchaghar’s business model ................................................................... 34 Table 2: SWOT ANALYSIS OF BHANCHAGHAR .................................................................. 37 Table 3:requirED RESOURCES FOR BHANCHAGHAR ......................................................... 38 TABLE 1: SCHEDULE OF BUSINESS PLAN..................................................................... 44 TABLE 2: RELATED RISKS OF BHANCHAGHAR .......................................................... 48 TABLE 3: GENERAL FINANCIAL ASSUMPTIONS OF BHANCHAGHAR ............... 52 TABLE 4: BREAK EVEN ANALYSIS FOR EACH PRODUCT LINE ............................ 53 TABLE 1: GENERAL ASSUMPTIONS ................................................................................ 60 TABLE 2: CALCULATION OF PER UNIT WEIGHTED AVERAGE SELLING PRICE & VARIABLE COSTS .............................................................................................................. 60 TABLE 3: TOTAL BREAK EVEN ANALYSIS ................................................................... 61

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1. INTRODUCTION This business plan is prepared based on the idea of establishment of a business of ready meal in UK. This report is prepared as a document of business proposal that is useful in case of collecting funds from owners and bank loan as well as providing operational plan for the operation of this business. All of the information in this report is compiled with great care through analysing and mentioning reference of the analysis.

1.1 Rationale Now days the demand of ready meal is increasing in UK as people want the best quality of food in their home. As people are getting busier, they are now depending on ready meal for the best quality of food in their home. Increasing number of single family also causes the increasing demand of ready meal in UK. At present, worth of the market of ready meal is 38.8 billion pound with a compound annual growth of 3.1% after 2007. And the consumption volumes is increasing with a CAGR of 1.7% between 2007 and 2011(Gov.uk, 2014), that indicating the overall rising market consumption. So, in future the expected growth of the market will lead an optimistic number as well. Here, in case of business plan, I have decided to start a ready meal business among a lot of business plan, because of the future prosperity of this market. And as the name of “BhanchaGhar” all ready meal will be recognized.

1.2 Mission The mission of BhanchaGhar is as follows: 

Providing the best quality of food to the UK people in their home as they want.



Establishing a brand name by increasing the number of order in the local market.



Developing its employees through the proper training as well as proper motivation (Bach, 2005).

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1.3 Vision In future, the aspiration of BhanchaGhar is to increase its product line as well as customer base by communicating its product with outsized supermarket chain.

1.4 Design and structure of the report There are mainly four parts in this report, they are: 

Description of Business concept: this part is included with the identification of the core business concept, products and services proposed to be delivered, the target market of the business, specific features of the business and delivered products as well as the window of opportunity.



Feasibility research: this part is related to the market research. This is done based on both qualitative and quantitative studies through which can be found the key areas of feasibility research, such as, product or service, industry where the company belongs, market feasibility, organizational structure, financial feasibility etc.



Development of the business model: defines the identification of appropriate business model, its related elements, core strategy of the business, its competitive advantage etc.



Business plan: this refers to the step-by-step approach to deliver the business model, viability of the plan as well as its required budgets & investment etc.

1.5 Relevant models and Information sources used In order to gather data for the development of the business model, here is used both primary and secondary data sources, such as, questionnaire, focus group where the different people of London were asked about their habit and demand for the ready meal, journal, websites, news papers and pervious research. The survey method is used to research about the ready meal business. SWOT analysis also performed.

1.6 Assumptions These are the assumptions of BhanchaGhar those are estimated in the beginning of its operation, within four years, it would obtain: 10 | P a g e



The sale growth will be approximately 20% for the first 4 years. Then the growth will be assumed constant at 4% for the rest of the year or life cycle.



Here, on an average profit would be more than 15%. So, within short time this profit can be contributed able to recover the investment.



Product related other costs will be declining over the time period.

1.7 Timescales for achievement After considering the feasibility research of the business it is needed to identify the model of the business. Then required to look for a suitable location where the business will be set up, to buy Plant and equipment, machinery for its operation. It may require minimum ten months to activate the business.

2. BUSINESS CONCEPT 2.1 Description of Business Concept Now days the demand of ready meal is increasing in UK as people are getting busier and the number of single family is also increasing. In future the expected growth of the ready meal market will lead an optimistic number as well (Ashgate.com, 2014). Based on the future prosperity of this market it is decided to establish a business that is recognized as “BhanchaGhar”. Providing the best quality of food to the UK people in their home as they want is the mission of BhanchaGhar. Actually, the business will establish the product lines of ready meal of Nepalese Cuisine in the UK market by conducting local small and medium sized stores.The company is planning to provide four items to its customers, such as, BhanchaGhar Dry Meat Curry, BhanchaGhar Chicken Curry, BhanchaGhar Dumpling and BhanchaGhar Frozen foods. Raw materials of the production will be provided from the local Nepalese and Indian wholesaler. In London the food development centre will be established.

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2.2 The Concept Statement 2.2.1 The Product / Service Based on the demand and expectation of customers BhanchaGhar is trying to offer the product lines of ready meal of Nepalese Cuisine in the UK market. The company is planning to provide four items to its customers, such as, BhanchaGhar Dry Meat Curry, BhanchaGhar Chicken Curry, BhanchaGhar Dumpling and BhanchaGhar Frozen foods. 2.2.2 Target Market Actually, most of the customers having more income capacity prefer the ready meal than other income level. Again the male customers are more likely to prefer the ready meal foods than female customers as they are too busy to make their own foods. So, target market of BhanchaGhar is the male customers and higher income level customers as they prefer more ready meal. 2.2.3 Value Added BhanchaGhar will provide different products that are superior to others with special diversification. Along with the product lines of ready meal of Nepalese Cuisine different country foods like Japanese, Chinese and Other Asian foods with ready meal item will also be delivered by the business. It will be specialized in delivering quality foods. At the same time, it will deliver foods in a rapidly manner with 24 hours services. 2.2.4 Specific Features The main objective of BhanchaGhar is to provide healthy foods with rationale price. It is dedicated to serve its customers throughout 24 hours seven days in a rapidly manner. In this concept, it decided to have a good distribution channel to provide services its customers (Bach, 2005). 2.2.5 Who Is Involved In order to operate the business, BhanchaGhar have decided its organizational plan which is related with various activities and departments. In this case the business may needs to have employees of Operation Department, Production department, marketing department, customer Service Department, Financial department and HR department etc. To get financial support from

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the bank loan, it is required to get help from financial advisor. Besides, in order to set up the business, it is needed to get help from a lawyer also.

2.3 The Window of Opportunity In future, the aspiration of BhanchaGhar is to increase its product line as well as customer base by communicating its product with outsized supermarket chain, such as, Tesco, Iceland and Sainsbury throughout UK. This may be challenging for the business as the market is already saturated. So, this will be happened BhanchaGhar by providing unique service and product quality that is specialized on the healthy value of foods. Besides these, improving the quality of management, customer services and effort of the team will help to make the business to become successful (Barrow, Barrow and Brown, 2008).

3. Feasibility research of the business plan 3.1 feasibility research plan The success of the business depends on many issues where the main significant factor is identifying the feasibility of the plan to be introduced in the market. So, identifying the needs of the customers, the existing products, industry, the wants and expectation of the customers, and the overall macro variables should be properly done before launching the products in the market. In this case the business organization tries to do the market research constantly to track the trends of the market and the perception of the customers properly (Siegel, 1993). So, the market research is always recommended to be followed before going to finally launch the products and here the MR should be done for several reasons like to identify the potential customer for the proposed products or services, evaluating the industry and its prospect in the future, setting the objectives and targets for the future, identify the gap in the market, have an idea about the perception and motives of the customers and finally to make some strategies (Weiers, 2004).). So, an effective marketing strategy should be done in the following ways that will be followed in this research;

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determining the problems and research objectives developig the research plan

methodologies build up

collection of information

analysis of the information

present the findings

making the decisions FIGURE 1: PROCESS OF MARKETIGN RESEARCH

Source: Pinson (2008). So, the marketing research always should be followed in such a way so that the information is collected properly so that the desired outcomes and the objectives are met. Here, for collecting the information for the feasibility study of the product, market, industry will be done through the different process (McDaniel and Gates, 2005). First of all the objectives of the research will be met then the proper information will be collected from both the secondary and the primary sources for the analysis. After analysis of the collected research and findings the proper decisions will be made.

3.2 primary and secondary data needs Both primary and the secondary data are required for this research. The primary data were collected through the questionnaire and the focus group where the different people of London were asked about their habit and demand for the ready meal (Burns and Bush, 2000). While collecting the primary data some issues were considered here so that the data can be collected 14 | P a g e

properly. The primary data were collected within limited time and considering the sample of 100 that can properly represent the full population. There were some disadvantages of primary data faced by the researcher like the primary data is more costly, time consuming, and require more effort. However, primary research is more relevant and accurate as the data are collected by the researcher that is more reliable for the research. In this research and feasibility study for the ready meal business, the secondary data is also used where most of the data were collected from the journal, websites, news papers and pervious research. The major disadvantages of the secondary data are it may be less reliable and unfit for the research. However, the secondary data can easily be collected by the researcher within short time and limited cost ((Burns and Bush, 2000). Here, data are collected from both the primary and the secondary sources and some issues like Irrelevant Data, Age of the Data, Quality of Research and Inadequate Facts were properly considered by the researcher.

3.3 research methodologies Marketing research can be done in five ways like survey, focus group, interview, observation and field trials. Here the research about the ready meal business was done considering the survey methods. The respondents are provided different questionnaire then the data were collected both in the numerical and qualitative form. So the research was done in the mixed methods. 3.3.1 Data collection methods Data can be collected both in quantitative and qualitative form and in both ways that is mixed method (Blackwell, 2008). Here the data were collected through the questionnaire and the semi structure interview methods that mean the research was done in the mixed method. However, the quantitative data were collected through the questionnaire where the respondents were asked different questions to respond under 5 scales to collect the data in the numerical form. On the other hand, interview was made to find out the perception and opinion of the customers about the ready meal in the market. The interview was done to ask the question to the customers where they were asked about their background and what is their perception of the ready meal and whether the current market is able

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to provide the healthy foods and other requirements. The sample of 100 respondents was asked about the ready meal and all the respondents were selected randomly. Finally the secondary research was done to analyze the industry and the market where different data were collected by the researcher considering the published data from different secondary sources like article, news papers, website etc. 3.3.2 Sample description The demographic position of the sample is shown in the following figure and table; TABLE 1: DEMOGRPAPHIC POSITION OF THE SAMPLE

Diameters Gender Races

Age

Education

Income

Profession

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Range Male: Female: British Other European Asian African others >20: 20-30: 30-40: 40-50: 50-60: 60 ABOVE High School/College Undergraduate Postgraduate PhD: £8,000 and bellow £8,001-12,000 £12,001- 20000 £20,001-25,000 £25,001 and above Business retired Job holder

Valid Respondents

Percentage 62 38 30 25 24 11 10 7 20 28 25 15 5 26 34 23 17 45 20 21 9 5

62 38 30 25 24 11 10 7 20 28 25 15 5 26 34 23 17 45 20 21 9 5

19 14 67

19 14 67

Marital status

Single

30

30

Married

52

52

Divorced

18

18

Gender of the respondetns

38% Gender Male: Gender Female: 62%

FIGURE 2: GENDER OF THE RESPONDENTS

Source: made by author. The total gender respondents were 38% female and 62% male. So, the most respondents of the sample was male and the female number

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Races of the respondents 10%

British 30%

11%

Other European Asian African

24%

others

25%

FIGURE 3: RACES OF THE RESPONDENTS

Source: Author Though the sample size was 100 and the location was mainly in London city there were different races. Here, 30% were British, 25% were European, 24% were Asian, 11% were African and 10% were others.

Age of the respondents 28

30

25

25

20

20

15

15 10

7

5

5 0 >20:

20-30:

30-40:

40-50:

50-60:

60 ABOVE

FIGURE 4: AGE OF THE RESPONDENTS

Source: Author There were different age group to find out which age group should be targeted for the business of ready meals in London. Here, among 100 respondents 7 were below 20, 20 respondents were

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between 20 and 30, 28 respondents were between 30 and 40, 25 were between 40 and 50, 15 were between 50 and 60 and rest of the was 60 above.

education level 17%

26%

High School/College Undergraduate Postgraduate

23%

PhD: 34%

FIGURE 5: EDUCATION LEVEL OF THE RESPONDENTS

Source: Author. The 26% respondents were from high school, 34% from undergraduate, 23% from post graduate and 17% from PHD. This was done to measure whether education level has the effect for the demand of the ready meal in London.

Income level 50 45 40 35 30 25 20 15 10 5 0

45

20

21 9 5

£8,000 and bellow

£8,001-12,000

£12,001- 20000

FIGURE 6: ANNUAL INCOME LEVEL OF THE RESPONDENTS

Source: Author 19 | P a g e

£20,001-25,000

£25,001 and above

There were different income level of the respondents were 45 respondents earn less than 8000 pound, 20 earns between 8000 and 12000, 21 earns between 12001 and 20000 and 5 earns more than 25000 pound per year.

marital status and profession 80 67

70 60

52

50 40

30

30 19

20

18

14

10 0 Business

retired

Job holder

Single

Profession

Married

Divorced

Marital status

FIGURE 7: MARITAL STATUS AND PROFESSION

Source: Made by author. The above figure represents that from the 100 respondents total 19 were engaged with for their own business, 14 were retired and 67 were job holder. On the other hand, in case of marital status 30 were single, 52 were married and 18 were divorced.

3.4 feasibility research 3.4.1 Product/ service feasibility BhanchaGhar is trying to offer the products that customers prefer more considering their demand and expectation. Customers have different preferences but BhanchaGhar tried to find out the most common things that customers prefer more from the ready meal company. Here, the survey report is shown below;

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what would you expect from a ready meal business organization 56

60 50 40

34

30

21

20 10

32 25

21

20

20

22

30 21

20

19

2

3

23

13 8

5

2

8

5

0 1

2

3

4

5

1

2

quality

3

4

low price

5

1

2

3

4

5

1

good packaging

4

5

distribution

FIGURE 8: EXPECTATION OF THE CUSTOEMRS

Source: made by author Here, from the above figure, it is clear that the customers consider the quality of the ready meal more than other features. Her, 56% customers highly consider the quality of the ready meal then the price, packaging and distribution system of the company is preferred by them. The customers consider a standard preferable distribution channel for the ready meal.

which foods do you prefer more 35 30 25

more unlikely

20

unlikely

15

neutral likely

10

more likely 5 0 ready meal

home made meal

FIGURE 9: CUSTOMERS PREFERENCE

Source: Made by author 21 | P a g e

fast foods

restaurants

Before launching the foods, BhanchaGhar tried to find out how many customers prefer the ready meal foods. Here, maximum customers prefer the ready meal foods shown by the more likely column. Then they prefer the home made foods more likely. The biggest challenge is the customers avoid the fast foods shown by the fast foods section. So, the demand for the ready meal is high in the market.

what is your buying behaviour about the ready meal 45 40 35 30 25 20 15 10 5 0

I prefer ready meal in my daily food menu I will be using the ready meal in the future I would like to buy regulary

more unlikely

unlikely

neutral

likely

My full family member prefers ready meal

more likely

FIGURE 10: BUYING BEHAVIOUR OF THE CUSTOEMRS

Source: made by author Then BhanchaGhar tried to measure how the customer prefers buying the ready meal form different shops. Here, the customers’ respond was like the following where the customers less want the daily meal in their food menu though it is easy for them to have the ready meal. In this case BhanchaGhar tried to segment that should be targeted for the ready meal. The following table will be helpful in this regards. TABLE 2: CUSTOEMR BUYING BEHAVIOUR IN DIFFERENT GROUPS

Ready

Gender

income level

meal buying male

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female

£8,000 and £8,001-

£12,001-

£20,001-

£25,00

bellow

20000

25,000

1 and

12,000

above

Daily

Weekly

Irregul

F

%

F

%

F

%

F

%

F

%

F %

F %

3

0.6129

1

0.36

9

0.2

5

0.2

7

0.3333

6 0.6666

3 0.6

8

03

4

8

1

0.1774

1

0.47

1

0.3111

1

19

8

4

4

11

7

0.1129

5

0.13

1

0.2888

2

3

89

0.02

9

0.2

03

ar never

6

0.0967

1

74 total

6 2

1

5 6

0.3

33 7

33 5

0.2

4

5 4

0.2

1

8

0.1904 76

3

6 3

0.3333

0.1428

67 2 0.2222

1 0.2

22 1 0.1111

1 0.2

11 0 0

0 0

9 1

5 1

57 4

1

2

5

0

1

2

1

1

Here, it is found that the customers preferred the daily meal in different ways. The male and female difference is shown in the following figure;

male 10% Daily

11%

Weekly 18%

61%

Irregular never

FIGURE 11: MALE RESPONDENTS BEHAVIOUR

From, the above figure, it is clear that most of the male customers prefer the ready meal foods as they are too busy to make their own foods. In this case the male customers should be more targeted as they buy the food more frequently.

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female 3% 13% Daily

37%

Weekly Irregular never 47%

FIGURE 12: FEMALE RESPONDENTS BEHAVIOUR

Here, female customers, buy the ready meal more less as they prefer the home made foods than the ready meal from the market. 0.7 0.6 0.5

£8,000 and bellow

0.4

£8,001-12,000 £12,001- 20000

0.3

£20,001-25,000 0.2

£25,001 and above

0.1 0 Daily

Weekly

Irregular

never

FIGURE 13: INCOME LEVEL AND THE UYING BEHAVIOUR

Source: made by author Finally, in case of the income level the customer with more income capacity prefer the ready meal than other income level. So, BhanchaGhar should focus more on the male customers and higher income level customers as they prefer more ready meal. On the other hand, they prefer the 24 | P a g e

better distribution system that also should be considered for the male customers and others. So, there is gap in the market and the demand will increase in the future. 3.4.2 Industry feasibility The industry of ready meal that means it belongs to the food industry and the ready industry of UK is more competitive as there are many big players in the market. The ready meal market of the UK is going high daily as the number of the single family is rising and the people are getting busier. The market is worth of 38.8 billion in 2012 that represents the compound annual growth of 3.1% after 2007 (Pseltd. 2014). This rate is expected to be 6% in 2016. The overall market consumption is rising where the consumption volumes with a CAGR of 1.7% between 2007 and 2011, to reach 5.2 billion kg in 2011. So, the expected growth of the market will lead the total value of the market to 53.4 billion dollar (Agency, 2014). The full industry can be analyzed through the Porters five forces analysis;  Bargaining Power of buyers: In UK most of the ready meal provider companies are imposing the almost same price hence the switching cost is lower. As switching cost is lower in the market the bargaining power of the customers is lower and the products are sold with fixed price and no negotiation.  Bargaining power of suppliers: As there are many competitors striving to capture the market and the customers prefer the healthy foods with some attraction and special taste it is tough for the manufacturer to get the ingredients of the foods easily hence the bargaining power of the suppliers is high (BBC News, 2014). However, the long term contract with the suppliers can reduce the bargaining power of the suppliers.  Competition among the existing companies: the competition among the existing companies is high as there are many companies coming in the market but the growth rate is not so high so the only way to increase the growth of the firm is to switch the customers from other competitors that pushed the market towards the severe competition. The major competitors who are dominating the market are; Bartholdi Ltd, Look What We Found!, Cauldron Foods Ltd, Chesswood Foods, COOK Ready Meals, Creative Foods, Quattro Foods Limited, Crispy Snacks Ltd, Dalepak Foods, S&L Catering Limited, DelishDish Foods, Dragonfly Foods, Gluten Free Foods Ltd, Goodlife Foods Ltd,

25 | P a g e

Kettleby Foods, Lodge Farm Kitchen etc (BBC News, 2014). These companies are the top leader of the market where the market is more competitive.  Threat of new entrants: The market requires more capital and the existing firms have already made many loyal customers in the ready meal industry where the new firm will face difficulties to face the competition and make many customers (Euromonitor.com, 2014). Though the threat of new entrants is low, still now there are many companies operating the business just recently and made a good place in the market. However, the threat on new entrants is moderate for the ready meal industry.  Threat of substitute products: the major substitute products for the ready meal are the fast foods, homemade foods and other restaurant foods. However, as the customers of fast foods is decreasing and the customers are now switching to more healthy foods the threat of substitute products is not high (FoodManufacture.co.uk, 2014).. But other foods can capture the markets if they provide better promotion and quality foods in this case the threat of substitute products will be high. So, form the analysis the industry is increasing and the competition in this industry is high where the many companies are doing the business with almost same competitive advantage. Ready meal industry Life cycle: The ready meal industry is not matured now but the market is growing. But the market will soon be saturated where the companies have to make different policies like product penetration, new product development, diversification or new customer development for the business. So, now the industry is in the growth phase and it is going to be more saturated.

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FIGURE 14: INDUSTRY LIFE CYCLE

Source: Kumar and Day, 1998. 3.4.3 Market feasibility As BhanchaGhar is planning to start the ready meal business the biggest challenge is realising the trends and position of the market. Here, both the primary and the secondary research is shown in the following; Primary research: The customers are asked about the current market position of the ready meal industry of UK. Here, the most of the customers disagreed with the effectiveness of the market and they think the market should be developed more. On the other hand, the customers think that the price is not stable and they market should emphasize more on the healthy foods. Hence, the ready meal market needs to be developed and some new products should be brought.

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35 31 29

30 25

25

24

22 20

20

18 15

15

13

the price is rationale in the ready meal market the destribution channesl and other facilities is available

9

10

The current ready meal market is effective They provide the healthy foods

7

5 0 strogly disagree

disagree

neutral

agree

strongly agree

FIGURE 15: CURRENT MARKET POSITION

Source: Made by Author The following figure states the liability of the customers in the ready meal market industry. Here, most of the customers think that though the market is not properly providing the products still now there are many issues to be developed. They think that still now they are satisfied and will be buying the foods from the ready meal market. This is because the ready meal market is a demand able market but requires more changes.

I am happy with the current ready meal I will recommend others to buy the ready meal I will be buying the ready meal in the future

0

10

20

30

40

FIGURE 16: LOYALTY OF THE CUSTOMERS TOWARDS THE MARKET

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Then customers are asked to find which one should be developed to improve the market and to meet their demands. The quality of the foods and the new products development gets more priority. So, customers in the ready meal market want more quality foods and items from the market.

More items

Online Sales more likely likely New product

neutral unlikely

Availability

more unlikely

Quality 0

5

10

15

20

25

30

35

FIGURE 17: WHIC ONE SHOULD BE DEVELOPED IN THE READY MEAL

Source: made by author. In addition in the above it is shown that the ready meal industry is more perfect for the high income level customers and the male customers prefer the ready meal foods more where the female customers prefer the home made meal. So, the customers should be given priority considering their preference for the ready meal. Secondary research: UK ready meal market is more growing market here the customers prefer the ready meal as the number of the single family is increasing who wants the ready meal. Besides that most of the citizens of UK are too busy to make their foods at home and the fast food industry is not preferable due to its health risk (MarketWatch, 2014). Here, in the ready meal market, the chilled ready meals are considered 50% of the total market this sector grew more than twice the rate of the frozen ready meals in 2012 (FoodManufacture.co.uk, 2014). Here, customers prefer the 29 | P a g e

flavour of the foods besides the quality of the foods and in that case new recipes and items inspired by various ethnic cuisines are being launched into the market. I addition, there is a niche in the market for children's ready meals. 70% of the customers prefer the vegetables and agro based foods who are the buyer of the ready meal market (Euromonitor.com, 2014). 3.4.4 Organizational feasibility As the ready meal industry is more competitive the success of the business lies more on the successful service providing to the customers. Hence a strong organizational structure should be developed. BhanchaGhar will divide the activities of the full organization under the few departments where different departments will have different activities that are shown below; TABLE 3: ORGANIZATIONAL POSITION OF BHANCHAGHAR

Departments Personnel

responsibilities

Operation

One head of the department will supervise it and the overall

11

Department

operation of the ready meal manufacturing will be supervised by the team.

Production

15

department Marketing

team and the leader will help to produce properly. 8

department Service

5

department

The complain and other services like online ordering and procession will be done in this department

6

department HR

The products of BhanchaGhar will successfully be promoted by this department to the customers with appropriate strategies

Department Financial

The production and its effectiveness will be monitored by this

The feasibility of the products and different financial plans will be made by this team

6

The full human resources will be controlled and monitored by this department and all the employees will get proper training and practices here.

The full team will be controlled by the CEO of the company where under his supervision every team or department head will control the full department. There will be democratic leadership and organizational structure to control the full activities but the department head wills manage the team. So, the organizational structure will be more feasible for the success of the business.

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Business process: BhanchaGhar will do the business in different ways where the major business activities and process are shown below;  Raw material collection  Procession the materials  Manufacturing the products  Packaging the products  Bringing the products in the store room  Sending the products in the local branch  Marketing the products  Selling and serving the customers  Taking orders from the customers  Delivering the products to the customers with home delivery All of these activates will properly be managed to monitor the full system and increase the efficiency of BhanchaGhar. 3.4.5 Financial feasibility The start of requiems and costs for starting the ready meal business is shown below; TABLE 4: START UP CAPITAL

Items

Costs in pound (000)

Plant and equipment

10

Machinery

8

House rent

3

Marketing

5

materials

3

Packaging machine

2

Working capital

4

total

35

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The total cost required for the initial time is 35,000 pound. The full capital will be managed by the following ways;

40% own capital Bank loan 60%

FIGURE 18: CAPITAL STRUCTURE

The 60% capital will be managed by the owner then rest of the business funds will be managed by the bank loan. BhanchaGhar is planning to offer the following four foods items for the customers at the initioan time; 1. BhanchaGhar Dry Meat Curry (P1) 2. BhanchaGhar Chicken Curry(P2) 3. BhanchaGhar Dumpling(P3) 4. BhanchaGhar. Frozen foods (P4) Based on this the forecasted salesand volume of the sales is shown below; TABLE 5: FORECASTED SALES VOLUME

Forecasted sales quantity

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Products

Year 1

Year 2

Year 3

Year 4

P1

50000

60000

72000

86400

P2

70000

84000

100800

120960

P3

30000

36000

43200

51840

P4

20000

24000

28800

34560

140000 120000 100000 P1

80000

P2 60000

P3

40000

P4

20000 0 Year 1

Year 2

Year 3

Year 4

FIGURE 19: FORECASTED SALES VOLUME

Source: Made by author Here, the growth of the sales is forecasted assuming the 20% growth every year for the first 4 years. Then the growth will be assumed constant at 4% for the rest of the year or life cycle. TABLE 6: AVERGAE PROFIT PERCENTAGE

P1

P2

P3

P4

Total cost 0.8 0.7 0.4 sales per unit 1 0.9 0.55 Percentage of profit 0.2 0.2 0.15 Here, the average profit would be more than 15%, so other costs will be made considering

0.55 0.72 0.17 the

net profit of the product. So, the profit can be easily managed and the firm will be able to recover the investment within short time. 3.5 ambition Vs Ability The ambition for BhanchaGhar is to provide the different products that are superior to others with special diversification. The company will provide the different country foods like Japanese, Chinese and Asian foods with ready meal item to capture more customers. The major issues related to this are BhanchaGhar will be specialized to deliver the foods more quickly and there will be 24 hours services. So, the ambition of the company is to capture a lot of customers and making the better place in the market making a good brand image. The growth is assumed to eb 33 | P a g e

20% for the first 4 years. Here, the problem is that the market is already slightly saturated and there is many companies offering the products to the customers. Hence, the 20% growth for hte first 4 years may be challenging. However, with unique service and product quality specialising on the healthy value of the foods will be preferred. The better quality management, customer services and effort of the team will help to make the ambition more reliable. So, the overall feasibility of the business is quite satisfactory as the products to be offered by BhanchaGhar would be more focusing on the healthy foods with rationale price. The market is growing and the startup capital for this business is not so high. So the feasibility is satisfactory and there will be more potentiality in this sector.

4. THE BUSINESS MODEL 4.1 Business Model BhanchaGhar is a business of ready meal that will provide the best quality of food to the UK people in their home as they want. And, the business will establish the product lines of ready meal of Nepalese Cuisine in the UK market. Here is the depiction of business model of BhanchaGhar: Table 7: summary of bhanchaghar’s business model

Key partner

Key activities



Myself

Serving



Expert

quality of food at

Value

best proposition 

Customer

Customer

relationships

segments 

High

Customer order

home in a prompt

quality

by phone call or

custom

manner

food

e-mail

and

ers

Customer

promptly

they

services

will serve based

income

on their order

level





Male

Higher

custom

Key resource 34 | P a g e

Channels

ers



Experts &



advisors 

campaign

Marketing



& 

nt team

Online marketing

Machinery, plant

Visit of instore

manageme 

Marketing

&



Offline marketing

equipment

Cost structure

Revenue streams

From the revenue streams all of the costs, that is fixed From the delivery of food at and variable costs are recovered

destination

Source: made by author. (Cross and Richey, 1998)

4.2 Core Strategy Through the identification of core strategy of a business, its sustainability and competitive advantage can easily be understandable. There are three basic elements to identify the core strategy of a business (Finch, 2010): mission of the business, scope of product/market and differentiation basis. 4.2.1 Business Mission The mission of BhanchaGhar is as follows: 

Providing the best quality of food to the UK people in their home as they want.



Establishing a brand name by increasing the number of order in the local market.



Providing improved services to its target market in order to raise the number of order in the local market.



Developing its employees through the proper training as well as proper motivation (Cohen and Cohen, 1995).

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4.2.2 Product/Market Scope Recently UK ready meal market is more growing market. This is because of the increase in number of single family as well as their busyness. Moreover, people are so much health conscious as they do no prefer to have fast food. However, considering the demand and expectation of customers BhanchaGhar is trying to offer its products. Now, BhanchaGhar is trying to offer the product lines of ready meal of Nepalese Cuisine in the UK market. Along with the product lines of ready meal of Nepalese Cuisine different country foods like Japanese, Chinese and Other Asian foods with ready meal item will also be offered by the business. 4.2.3 Basis of differentiation BhanchaGhar will provide ready meal of Nepalese, Japanese, Chinese and Other Asian foods in the UK market. By his way people can get variation in their tastes. In case of providing foods, they mainly focus on the delivery of quality and healthy foods with rationale price. Again, BhanchaGhar offers its services to its customers throughout 24 hours seven days in a prompt manner. In this concept, it decided to have a good distribution channel to provide services its customers.

4.3 Competitive Advantage & Sustainability Competitive Advantage & Sustainability of BhanchaGhar can be understandable through the understanding of its Competitive Positioning, SWOT Analysis and its value proposition (Osterwalder, Pigneur and Clark, 2010). 4.3.1 Competitive Positioning It seems that Bird’s Eye, Tesco, Sainsbury, Iceland and Findus etc. are the direct competitors of BhanchaGhar (Harvard Business Review, 2014).

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Figure 20: competitive strategy of bhanchaghar

Source: Porter’s generic strategies (1985) BhanchaGhar will provide broad categories of ready meal with a reasonable price, which means it is, will be a cost leader in the market. 4.3.2 SWOT analysis Table 8: SWOT ANALYSIS OF BHANCHAGHAR

S- Strength       

Efficient management Presence of expertise Democratic leadership Location of the business Prompt delivery system Proper trained employees Diverse menu

O- Opportunity

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W- Weakness  

Unavailability of bank loan Absence of brand reputation

T- Threat

 

Innovation of product lines Expansion of the business throughout the country

   

Rivalry among existed firms Competitors strong competition Departure of the expertise Depression in the economy

4.3.3 Superior Value Proposition Providing high quality food to customers at their home in a prompt manner is the proposition of BhanchaGhar.

4.4 Resource Needs

Table 9:requirED RESOURCES FOR BHANCHAGHAR

Infrastructures



Acquiring loan form bank, attaining feasibility research on product and services, market, industry, organization and financials.

S

Human

U

Resource

P

Management



Managing and administrating collector of raw materials, personnel of kitchen, advertising personnel, delivering personnel, job applicants

P O Technology R Development



Using their own websites can get order



Using IT systems may ensure the In-time order and delivery as well as

T

consumer research

I



N

Technology based new methods of promotion can be discovered for example, launching mobile applications

G

A 

Purchasing logistics vehicles for

T



Controlling the supply chain as well as its quality

I



Purchasing equipment of kitchen & bar, ingredients of cuisine etc.

V



Attachment with media

C

Procurement

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

I

Going green

T I E S

PRIMARY

Providing

Marketing

Delivery in a

ACTIVITIES

ready meals

campaign

prompt

at the home

manner

of customers

Visit of instore

Highly customer

Online

or oriented

Offline

service

marketing Clean environment

Accuracy of order

Employee training motivation In bound logistics

Operations

Outbound

Marketing

logistics

and Sales

Service

Source: made by author. From the above table, it is clear that in case of operating business of BhanchaGhar, it needs to have such types of resources that may support its primary activities as well as supporting activities (McKeever, 2002). 39 | P a g e

&

4.5 Partnership Network In the section 2.2.5, it is described who is involved with BhanchaGhar. Actually, it is a sole proprietorship business, where, 60% of financial support will come from bank loan. So, if their occurred any loses in the business, firstly it should meet up the bank loan, then remaining would go to the proprietor.

4.6 Value Deliverables to the Customers Functional: providing marketing campaign, visit of in-store, online or offline marketing, introduction of technology based new promotional methods (Osterwalder, Pigneur and Clark, 2010). Emotional: delivering products at desired destination in a prompt manner, and serving 24 hours seven days. Competitive: competitive strategy of BhanchaGhar cost leadership in nature Price: Pricing strategy would be competitive and reasonable comparing with others in the industry Ethics: BhanchaGhar uses different utensils for the cooking utensils of vegetarians & non vegetarians. Religious beliefs are also considered. Local raw materials are used in order to support the local economy (Pinson, 2008).

5. BUSINESS PLAN 5.1 Approaches to deliver the business model 5.1.1 Industry, Company and Products Ready meal business of UK mainly belongs to the broad category of food industry and in specifically the ready industry. Market of ready meal is growing popularity as the number of the single family is increasing as well as their busyness is also increased. Popularity of ready meal can be gauged from its market worth. At present the worth of ready meal market is 38.8 billion which is growing after 2007 in a compound rate of 3.1%. Consumption rate of this market is also 40 | P a g e

rising after 2007 (Tagetik.com, 2014). Bartholdi Ltd, Cauldron Foods Ltd, Chesswood Foods, COOK Ready Meals, Creative Foods, Quattro Foods Limited, Crispy Snacks Ltd, Dalepak Foods, S&L Catering Limited, DelishDish Foods, Dragonfly Foods, Gluten Free Foods Ltd, Goodlife Foods Ltd, Kettleby Foods, Lodge Farm Kitchen etc. are the major competitor that dominating the market. However, ready meal is now a growing market. And in this industry competition is very high where the many companies are doing the business with almost same competitive advantage (Pinson, 2008). Companies’ policies like product penetration, new product development, diversification or new customer development for the business may bring success of them. It is decided to establish a ready meal business by considering on the future prosperity of this market named as “BhanchaGhar”. This business will provide best quality of food to the UK people in their home as they want. To establish a brand name it will increase number of order in the local market. This can be happen through providing improved services to its target market by developing its employees through the proper training as well as proper motivation. Local Nepalese and Indian wholesaler will provide raw materials. And in London the food development centre will be established. However, BhanchaGhar will provide the product lines of ready meal of Nepalese Cuisine as well as Japanese, Chinese and Other Asian foods. it is planning to provide four items to its customers, such as, BhanchaGhar Dry Meat Curry, BhanchaGhar Chicken Curry, BhanchaGhar Dumpling and BhanchaGhar Frozen foods. It will provide its products in the UK market by conducting local small and medium sized stores (Tagetik.com, 2014).

5.1.2 Key to Success 

BhanchaGhar creates differentiation from other business through providing various ready meals of Nepalese, Japanese, Chinese and Other Asian foods in the UK market. By his way people can get various tastes of foods.



The main focus of this business is to delivering quality and healthy foods.



They provide various items of foods with rationale price in this competitive market.

41 | P a g e



Again, BhanchaGhar offers its services to its customers throughout 24 hours seven days in a prompt manner. In this concept, it decided to have a good distribution channel to provide services its customers.



Having expertise in each of the segments of business, such as, finance, production, marketing, human resource management etc. (Swedroe, Grogan and Lim, 2010).

5.1.3 Market The ready meal market of the UK is highly demand able market. Here, the customers prefer the ready meal as the number of the single family is increasing and most of the citizens of UK are too busy to make their foods at home. Henceforth the fast food industry is not preferable due to the risk of health. Due to this causes the overall market consumption is rising. In this market, the chilled ready meals are considered 50% of the total market. Basically, customers prefer the flavor of the foods in which, new recipes and items inspired by various ethnic cuisines are being launched into the market (Taylor, Gartside and Taylor, 2004). As a demand able market it requires some changes. Here, most of the customers disagreed with the effectiveness of the market and they think the market should be developed more. Again, customers in the ready meal market want more quality foods and items from the market. However, considering the market feasibility of BhanchaGhar, providing in the section 3.4.3, it is found that, the ready meal industry is more perfect for the high income level customers and the male customers prefer the ready meal foods more where the female customers prefer the home made meal. So, target market of BhanchaGhar is male customers’ and also customers belong to higher income level. In this case, competitive strategy of BhanchaGhar is to be cost leader, which is, providing broad categories of ready meal with a reasonable price (Swedroe, Grogan and Lim, 2010).

5.1.4 Marketing Plan In order to get success from the inception, it is important for BhanchaGhar to adopt a successful marketing plan. There are different marketing approaches to adopt the awareness of customers, for example, word of mouth strategy, in store visiting, advertisement in newspapers, website reviews, marketing campaign, online and offline marketing etc.

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However, from the

recommendation of customers BhanchaGhar decided these following approaches (Taylor, Gartside and Taylor, 2004) in order to create awareness of its customers: 

Marketing campaign



Word of mouth marketing



Visit of in-store



Online marketing



Offline marketing 90

No. of people chosen

80 70 60 50 40 30 20 10 0 Very insignificant friends Offline promotions food blogs Marketing campaign

Insignificant

Neutral

Family In store visiting Newspapers reviews Others

Significant

Very significant

Advertisements in newspapers Internet promotions Food websites reviews

FIGURE 21: CHOSEN SOURCES OF RECOMMENDATION TO SELECT THE READY MEAL

Source: made by Author Here, by dealing with marketing campaign the company can get chance to show its products to targeted customers. And based on this customer can find out the differences and may decide whether to go or switching this business’s products. Again, most of the people rely on the word of their nearest and dearest ones(Taylor and Gartside, 1998). It is important to keep happy customers to increase the business that may provide appreciated words to others. As word of mouth publicity is a trustworthy source of information for the higher socio-economic group, which is also an important marketing tool. 43 | P a g e

In store marketing is marketing tool where BhanchaGhar will distribute brochures in the local store to distribute its target market, which may create awareness to its customers. BhanchaGhar will develop a website that provides entire information of its product lines, which may play an important role to make customer awareness in this techno based world. Advertisement in local newspapers, newspaper reviews etc. are also some marketing options of BhanchaGhar. But these are not initially practicing because of the cost (Taylor, Gartside and Taylor, 2004).

5.1.5 Design and Development Plan The following table represents time schedule of this business plan, which provides the planning and execution of the business plan from its beginning to end: TABLE 10: SCHEDULE OF BUSINESS PLAN

Sl.

Name of the

No. activity

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

1.

Idea generation

2.

Preparation of business plan

3.

Secondary research

4.

Primary research

5.

Research assessment

6.

Risk identification

7.

Risk analysis

8.

Risk mitigation

9.

Waiting

for

loan approval

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Bi-week

10.

Getting approval from the authority

11.

Taking

house

rent 12.

Coordination of required equipment

13.

Local distributor selection

14.

Recruitment

15.

Utility setup

16.

Employee training

17.

Inauguration From the above mentioned schedule, it is found that the business plan of BhanchaGhar will be launched within 10 months if there is no interruption or occurrence of any unexpected situation.

5.1.6 Management Team BhanchaGhar is a sole proprietorship business, where the owner controlled his business as well as enjoyed entire profit or loss.

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OWNER Financial Advisor

Marketing Advisr

General Manager Assistant Manager Production Manager Employee 1

Employee 2

Employee 1

Sales &Marketin g Manager

Finance Manager

Employee 2

Employee 3

Account Manager

Human Resource Manager

Supply Chain Manager Employee 1 Employee 2

Employee 3 FIGURE 22: ORGANIZATIONAL STRUCTURE OF BHANCHAGHAR

In order to get success in this business the owner hired some specialist of each business segment (Young, 2007). At the same time it is needed some employees to operate the business, such as, employees required for cooking, raw material collector, managing the business, delivery of products, marketing, consulting with customers etc. Here, the key personnel are mainly chefs based on which quality of products can be updated, sales and marketing employees from which customer get knowledge about the product and distributor and deliverer who are responsible for providing the ultimate services to its customers.

5.1.7 Operations Plan Supply Chain Management In order to make purchases BhanchaGhar will use electronic data exchange (EDI) system. This system allows keeping entire records from purchase to sale. Category wise (BhanchaGhar Dry Meat Curry, BhanchaGhar Chicken Curry, BhanchaGhar Dumpling and BhanchaGhar Frozen 46 | P a g e

foods) all purchases are sorting out. In order to lessen the cost of sales, raw materials are purchased from local Nepalese and Indian wholesaler. After the delivery of goods, production manager would confirm the cross checks. Then these required materials are putted in the EDI system and then the next order would take place. In order to set up the entire EDI system, BhanchaGhar needs four components, such as, EDI software to translate information, EDI mapping for synchronizing with the system of customers, EDI VAN required to continue the flow of transactions, EDI support and maintenance services (Finch, 2010). Operating Process Operating process of a business is very useful to regulate its entire activities (Young, 2007). The operating process of BhanchaGhar is very simple that standardize entire activities’ courses of action. Its operating process can be easily figure out from its organizational structure. However, from the inception of this process, by using phone call, mail order, and company’s website etc. a customer can make order. The order details are filled up by the sales and marketing department. Then to verify the payment, it sends to the account department. Customer will be informed in case of invalid payment. The sale order copy is sent to the production department also. After receiving the sale order form by the production department, production process would start. While production done, it would be passed to the supply chain department. Production process is included with the utilization of capital and packaging. Production department keep record of inventory. In order to keep record of inventory level, manual index system is used. In case of additional requirements of inventory, purchase order form is send to the supply chain (Finch, 2010). However, ensure of quality of the product and innovation of new ideas are comes from the product development centre. And product deliveries as well as purchase of raw materials are maintained by the supply chain manager. By defining the process of operation BhanchaGhar may lessen its risks of failure. Equipment To operate the ready meal business of BhanchaGhar it is required some equipment in kitchen, as well as packaging purposes. For storage purposes required food-grade shelving, chest, walk-in freezers, standard- or blast freezers; chopping, dicing, cubing, peeling, slicing, mixing and processing equipments etc. are needed for preparation of foods; in order to cook, stock pot and wok ranges, deep fryers, broilers, salamanders and cheesemelters, ovens, griddles, frying pans, 47 | P a g e

gas and toasters etc.; electronic thermostats, energy load levellers, automatic shut off switches etc. accessories are also required. Some materials are needed for packaging purposes also.

5.2 Business Concern and Risk In-order to establish the ready meal business of BhanchaGhar, it is needed to have knowledge about related risks. Manage should have proper concern about the related risks o the business, which may build a deviation between actual and expected outcome (Bach, 2005). And this deviation will lessen the success of the business.

5.2.1 Risk identification TABLE 11: RELATED RISKS OF BHANCHAGHAR

Related risks

Likelihood of Possible outcomes occurrence

Business plan preparation require High

Significant delays happen as no other

more time than expected

works are done without this.

Unsuccessful market research

Moderate

Causes the delay of related tasks and suboptimal decision.

Delay in getting loan approval or High

Significant delays happen as the lack of

proper authority approval

funds

and

required

approval

of

authority. Interruption

in

coordination

of Moderate

required equipment Unavailability of employees

Causes in interruption of testing items and training employees.

Low

Employees training period may be affected.

Quality of product may not at desired High

Required to take another product and

level

market feasibility study for reaching the expected quality of products.

48 | P a g e

5.2.2 Risk management It is important to mange related risks of the business to achieve the success of the business. So after the identification of related risks the manager of BhanchaGhar is required to manage its related risks to achieve the success. In case of risk management, the following steps should be taken: 

While write down the business plan, its related risks should be identified.



List of risks should be prepared while recognizing related risks.



After the preparing this list, the probability of risks occurrence and their impact should be assessed.



Based on the assessment of probability and its impact, a risk management team would be defined (Blackwell, 2008).



This team will be related to the preparation of risk management plan to tackle the related risks.



Henceforth, entire people should be concerned about the business associated risks as well as the goal achievement.



It is required to motivate all of the employees in this way, which they can put their best in this business in a proper way with a great zeal (Blackwell, 2008).

After all, to lessen the divergence in the outcome of the business, it is required to monitor every task of BhanchaGhar properly.

5.3 Critical Success Factors (CSF) Identification of critical success factors (CSF) is important that define the areas that affect the success of a business. The operation of BhanchaGhar is also influenced some critical factors for success. They are: 

Participation of human resources



Presence of experts and advisors



Creation of marketing and management team



Establishing brand name



Location of the business

49 | P a g e



Marketing and benchmarking



Employee training and motivation



Quality of food and service



Worth of money



Management of customer relationship



Balancing throughout operational and human resource management



Profitability of the business



Buying leverage at a maximum level and



Experience and knowledge etc.

5.4 Issues for Sustainability There are some sustainability issues of a business for sustaining in the market, which are required to consider while establishing a business as well. Sustainability issues for BhanchaGhar are as follows (Bbkonline.com, 2014): •

challenges from Economics and Politics

•

explosive nature of price

•

availability of cheaper food from other food supply chains

•

increasing in complexity of policies

•

Fissures in the governance of food

5.5 Financial Plan 5.5.1 Financial Objectives 

It is forecasted that the growth of sales will be 20% in every year for the first 4 years.



Then the growth of sales will be assumed constant at 4% for the rest of the year or life cycle.



Productivity will be increase as sales increase annually.



The profit would be more than 15% on an average.



Variable cost will be decreased as the production will increase due to operational efficiency

50 | P a g e



Within shorter period the firm would repay its bank loan, as it will earn profit.

5.5.2 Start-up Costs As a startup business BhanchaGhar cannot launch its sales activity from the first month. From its business initiation, a legal permission is required in order to launch the business. Then in the meantime BhanchaGhar coordinate entire needed plant, equipment and machinery etc. In the meantime, it may develop a website for the creation of customers’ awareness about BhanchaGhar. In the section 3.4.5 the amount of startup capital has been calculated. Here is the graphical representation of split up start up costs of BhanchaGhar:

Costs in Pound ('000)

12 10 8 6 4 2 0

FIGURE 23: STARTUP CAPITAL OF BHANCHAGHAR

From section 3.4.5, total startup capital required 35,000 pounds. These amounts come from both the owner and bank loan. Here, the owner provides 40% and remaining will be managed from bank loan as well. The financial model is as follows:

51 | P a g e

40%

own capital Bank loan

60%

FIGURE 24: CAPITAL STRUCTURE OF BHANCHAGHAR

5.5.3 Assumptions In case of conducting the financial projections of BhanchaGhar, the following assumptions are all linked to them. The assumptions are as below: 

The economy is growing and this is continued in future.



Popularity of ready meal will be growing over time than before.



There is no occurrence of any unexpected changes.



Some financial assumptions for first five years are as follows, (details in appendix 1):

TABLE 12: GENERAL FINANCIAL ASSUMPTIONS OF BHANCHAGHAR

Assumptions

Year 1

Year 2

Year 3

Year 4

Year 5

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest Rate

15.00%

15.00%

15.00%

15.00%

15.00%

Tax Rate

25.42%

26.00%

26.42%

26.42%

26.42%

5.5.4 Break Even Point Analysis There is no sale of BhanchaGhar for first 9 months of its inception of business. After that, the company stars to sale and generating negative operating profits. However, after the first year, the company is in break even. Although BhanchaGhar has four product lines, such as: 5. BhanchaGhar Dry Meat Curry (P1) 52 | P a g e

6. BhanchaGhar Chicken Curry(P2) 7. BhanchaGhar Dumpling(P3) 8. BhanchaGhar. Frozen foods (P4) In order to find out the break even, here is used weighted average price and weighted average variable costs (Businessmodelgeneration.com, 2014). Here, the total break even sales unit is 21,75,400 units at an average price of 0.85 pounds as well as total break even sales amount is 18,49,090 pounds. And it can achieve break even at year 2. After year 2 its operating profit will be positive as well. Appendix 2 shows the details. Here is given the graphical representation of total break even analysis: 350,000.00 300,000.00 250,000.00 200,000.00 150,000.00 100,000.00 50,000.00 0.00 -50,000.00

Year 1 Total Sales

Year 2

Year 3 Total Costs

Year 4

Year 5

Operating Profit

FIGURE 25: TOTAL BREAK EVEN ANALYSIS OF BHANCHAGHAR

The following table represents break even analysis for each product line: TABLE 13: BREAK EVEN ANALYSIS FOR EACH PRODUCT LINE

Break-Even in units

Name of product line

BhanchaGhar Dry Meat Curry 639823.53

Break-Even in Sales 543850

(P1) Chicken 895752.94

761390

BhanchaGhar Dumpling(P3)

383894.12

326310

BhanchaGhar. Frozen foods (P4)

255929.41

217540

BhanchaGhar Curry(P2)

53 | P a g e

2175400

Total

1849090

5.5.5 Projected Profit/Loss From the first ten year BhanchaGhar faces loss as there is no sale. That is shown in the following figure (details in appendix 3), which represents zero gross profit as well as negative net profit. 40,000 30,000 20,000 10,000 0 -10,000 -20,000 -30,000 Gross profit

Net profit or loss

FIGURE 26: MONTHLY FORECASTED PROFIT OR LOSS OF BHANCHAGHAR

But after year 1, it will face positive gross and net profit. As it represents here, the details shows in appendix 4: FIGURE 27: YEARLY FORECASTED PROFIT OR LOSS OF BHANCHAGHAR

54 | P a g e

180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Year 1

Year 2 Gross profit

Year 3

Year 4

Year 5

Net profit or loss

5.5.6 Projected Balance Sheet By forecasting the balance sheet of BhanchaGhar, it is found that every year its total noncurrent assets and total equity is increasing (details shown in appendix 5). This indicates future prosperity of the company. 250,000

Amount in Pounds

200,000 150,000 100,000 50,000 0 Year 1

Year 2

Year 3

Total Non-Current assets

Year 4

Year 5

Total equity

FIGURE 28: PROJECTED TOTAL NONCURRENT ASSETS& EQUITY OF BHANCHAGHAR

5.5.7 Projected Cash Flow From the inception of BhanchaGhar, its total cash receipt, expenditures as well as net cash flows are increasing (details shown in appendix 6), that are depicted in this figure: 55 | P a g e

Amount in Pound

400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 -50,000

Year 1

Total Cash received

Year 2

Year 3

Year 4

Total Expenditures

Year 5

Net cash flow

FIGURE 29: PROJECTED CASH FLOWS OF BHANCHAGHAR

5.5.8 Contingency Planning There may be various types of risks related with the operation of business, for which the firm may not prepared. And BhanchaGhar is not exceptional from them. As a new firm, BhanchaGhar may face: 

Inability of innovation



Unfilled customers demand



Changing customers choice and demand

Company may face other situations not mentioned here, for which it is not prepared at all. However, the firm needs to be alert about this entire problem and develop a contingency planning to get rid of probable difficulties as well (Finch, 2010).

5.6 Exit Strategy From the inception of business it is wise to anticipate the failure. In case of risky business, such as, ready meal business, where the market is already saturated; may not get success on their way. As BhanchaGhar will start its ready meal business, it should have some idea about exit strategy. In case of failure of the startup business of BhanchaGhar, it is required to sale the business on profit. From this loan amount would be repaid and remaining amount goes to the owner of the business. If it is not sale on profit, that is, sold on loss, at first the bank loan would be repaid and

56 | P a g e

then if any amount is remained would go to the owner. In case of inability to sale of the business indicates its bankruptcy as well (Blackwell, 2008).

5.7 Viability of the plan Based on the undertaking of both researches, that is primary and secondary research of the plan, it is assessed that the business proposal is viable (Finch, 2010). So successfully it can be implemented. The business proposal of BhanchaGhar fits with the glove in that case, by going target market demographics, their preferences, food habit as well as pricing expectation. Here, male and higher level people are target market of BhanchaGhar. With the establishment of suitable operating process BhanchaGhar may sustain in the market which is saturated and competitive in nature.

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Swedroe, L., Grogan, K. and Lim, T. (2010). The only guide you'll ever need for the right financial plan. 1st ed. Hoboken, N.J.: Bloomberg Press.

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Agency, F. (2014). Food Standards Agency - Business and industry. [online] Food.gov.uk. Available at: http://www.food.gov.uk/business-industry/#.U8lqCbEqaQI [Accessed 14 Jul. 2014].

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(2014).

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http://www.bbc.com/news/magazine-21443166 [Accessed 12 Jul. 2014]. 

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(2014).

Food

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manufacturing

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MarketWatch, (2014). Frozen Food Market (Vegetables & Fruits, Potatoes, Ready-ToEat Meals, Meat, Fish/Seafood And Soups) - Global Industry Analysis, Size, Share, Growth,

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And

Forecast,

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-

2019.

[online]

Available

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

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Appendix Appendix 1 TABLE 14: GENERAL ASSUMPTIONS

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Long-term Interest Rate 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Tax Rate 25.42% 25.42% 25.42% 25.42% 25.42% 25.42% 25.42% 25.42% 25.42% 25.42% 25.42% 25.42% Appendix 2 TABLE 15: CALCULATION OF PER UNIT WEIGHTED AVERAGE SELLING PRICE & VARIABLE COSTS

Name of product line

Quantity Weight of Per unit Weighted Variable Weighted of sales

BhanchaGhar Dry Meat 50000 Curry (P1) 60 | P a g e

each

selling

average

product

price

Per unit unit

Variable

selling

Cost per

price

unit

0.2941176 1

0.294118

Cost per average

0.8

0.235294

Chicken 70000

BhanchaGhar

0.4117647 0.9

0.370588

0.7

0.288235

30000

0.1764706 0.55

0.097059

0.4

0.070588

Frozen 20000

0.1176471 0.72

0.084706

0.55

0.064706

1

0.846471

2.45

0.658824

Curry(P2) BhanchaGhar Dumpling(P3) BhanchaGhar. foods (P4)

Total

170000

3.17

TABLE 16: TOTAL BREAK EVEN ANALYSIS

Break - Even Analysis

Year 1

Year 2

Total Sales

143,900.00 172,680.00 207,216.00 248,659.20 323,256.96

VC = Variable Costs

112,000.00 134,400.00 161,280.00 209,664.00 241,113.60

FC = Fixed Costs

41,000.00

Total Costs

153,000.00 175,400.00 202,280.00 250,664.00 282,113.60

Average price per Unit VP

0.85

Units sold

169,294.12 203,152.94 252,702.44 303,242.93 404,071.20

Average cost per Unit VC

0.66

0.66

0.64

0.69

0.60

0.19

0.19

0.18

0.13

0.20

41,000.00

0.85

Year 3

41,000.00

0.82

Year 4

41,000.00

0.82

Year 5

41,000.00

0.80

CM ( Contribution Margin) = VP-VC Break-Even in Sales Before Tax= Fixed Cost / (Contribution Margin/Average Price)

184,949.84 184,949.84 184,949.84 261,443.13 161,346.40

Break-Even in Units Before Tax 217,588.05 217,588.05 225,548.59 318,833.09 201,683.00 Fixed

Cost

Margin

61 | P a g e

/

Contribution

-7,755.00

Operating Profit

7,660.00

18,922.00

18,922.00

Appendix 3 Proforma Income Statement (yearly) Year 1 Year 2 Year 3 Sales P1 P2 P3 P4 Less: cost of sales P1 P2 P3 P4 Gross profit Less: Marketing and Advertisement Administration EBIT Less: interest EBT Less: tax @ tax rate Net profit or loss

62 | P a g e

Year 4

Year 5

50,000 63,000 16,500 14,400 143,900

60,000 75,600 19,800 17,280 172,680

72,000 90,720 23,760 20,736 207,216

93,600 117,936 30,888 26,957 269,381

121,680 153,317 40,154 35,044 350,195

40,000 49,000 12,000 11,000 112,000 31,900

48,000 58,800 14,400 13,200 134,400 38,280

57,600 70,560 17,280 15,840 161,280 45,936

63,360 77,616 19,008 17,424 177,408 91,973

69,696 85,378 20,909 19,166 195,149 155,046

18,300 10,000 28,300 3,600 3,690 -90 -23 -67

13,000 8,000 21,000 17,280 2,300 14,980 3,895 11,085

10,000 10,000 20,000 25,936 1,800 24,136 6,377 17,759

10,000 10,000 20,000 71,973

10,000 10,000 20,000 135,046

71,973 19,015 52,958

135,046 35,679 99,367

18,922.00

Appendix 4

Proforma Income Statement (monthly) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Sales P1 P2 P3 P4 Less: cost of sales P1 P2 P3 P4 Gross profit Less: Marketing and Advertisement Administration EBIT Less: interest EBT Less: tax @ 25.42% Net profit or loss

63 | P a g e

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

30,000 43,000 6,500 10,000 89,500

40,000 48,000 9,500 12,400 109,900

50,000 63,000 16,500 14,400 143,900

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

20,000 28,000 4,500 7,500 60,000 29,500

30,000 38,000 6,500 10,000 84,500 25,400

40,000 49,000 12,000 11,000 112,000 31,900

6,000 6,000 6,000 2,000 2,000 4,000 8,000 8,000 10,000 -8,000 -8,000 -10,000 3,690 3,690 3,690 -11,690 -11,690 -13,690 -2,972 -3,039 -3,617 -8,718 -8,651 -10,073

8,000 4,000 12,000 -12,000 3,690 -15,690 -4,145 -11,545

8,000 6,000 14,000 -14,000 3,690 -17,690 -4,674 -13,016

15,000 6,000 21,000 -21,000 3,690 -24,690 -6,523 -18,167

15,000 8,000 23,000 -23,000 3,690 -26,690 -7,051 -19,639

15,000 8,000 23,000 -23,000 3,690 -26,690 -7,051 -19,639

18,300 18,300 18,300 18,300 10,000 10,000 10,000 10,000 28,300 28,300 28,300 28,300 -28,300 1,200 -2,900 3,600 3,690 3,690 3,690 3,690 -31,990 -2,490 -6,590 -90 -8,132 -633 -1,675 -23 -23,858 -1,857 -4,915 -67

Appendix 5 Proforma balance sheet (yearly) Year 1 Year 2 Year 3 Assets Current assets Cash Other current assets Non-Current assets Long term assets Accumulated depreciation Total Non-Current assets Total assets Capital & liabilities Current liabilities Accounts payable Current borrowing Other current liabilities Long term liabilities Long term liabilities Total liabilities Equity capital Paid in capital retained earnings Total equity Total Capital &liabilities Net worth

64 | P a g e

Year 4

Year 5

4,000 14,733 0 18,733

4,000 12,518 0 16,518

4,000 25,026 0 29,026

4,000 89,999 0 93,999

4,000 218,045 0 222,045

18,000 1,800 16,200 34,933

25,000 2,500 22,500 39,018

30,000 3,000 27,000 56,026

35,000 3,500 31,500 125,499

40,000 4,000 36,000 258,045

0 0 0 0

0 0 0 0

4,000 6,249 0 6,249

3,800 25,964 0 29,764

3,500 59,443 0 62,943

21,000

14,000

7,000

0

0

14,000 -67 13,933 34,933 21,000

14,000 11,018 25,018 39,018 14,000

14,000 28,777 42,777 56,026 13,249

14,000 81,735 95,735 125,499 29,764

14,000 181,102 195,102 258,045 62,943

Appendix 6 Proforma cash flow (yearly) Year 1 Year 2 Year 3 Cash Received Cash from operation Cash sales Total Cash received Expenditures Expenditures from operations Cost of sales Marketing and Advertisement Administration Additional cash spent Interest paid Loan repayment Total Expenditures Net cash flow Cash balance

Year 4

Year 5

143,900 143,900

172,680 172,680

207,216 207,216

269,381 269,381

350,195 350,195

112,000 18,300 10,000 140,300

134,400 13,000 8,000 155,400

161,280 10,000 10,000 181,280

177,408 10,000 10,000 197,408

195,149 10,000 10,000 215,149

3,690

2,300 7,000 9,300 164,700 7,980 7,890

1,800 7,000 8,800 190,080 17,136 25,026

0 7,000 7,000 204,408 64,973 89,999

0 7,000 7,000 222,149 128,046 218,045

3,690 143,990 -90 -90

Appendix 7 strongly

disagr

neutr

agree

strongl

disagree

ee

al

1

2

3

4

5

27

25

17

13

24

29

18

22

7

the price is rationale in the ready meal 20

27

25

23

5

25

9

20

15

19

18

34

17

y agree

the current market position The current ready meal market is 18 effective They provide the healthy foods

market the distribution channesl and other 31 facilities is available total Loyalty towards the ready meal I will be buying the ready meal in the 12 65 | P a g e

total

future I will recommend others to buy the 9

20

15

31

24

21

8

19

21

ready meal I am happy with the current ready meal

31

Appendix 8: Demographic question 1. What is your Gender?  Male  Female 2. What is your nationality?  British (UK)  EU  Asian  African  Others 3. What is your age group?  20-29  30-39  40-49  50 and above 4. What is your annual total household income?  £10,000 and bellow  £10,001-15,000  £5,001- 20000  £20,001-25,000  £25,001-30,000  £30,000 and above. 66 | P a g e

5. What is your occupation?  Student  Self-employed  Professional  Executive  Unemployed  Others 6. What is your marital status o Single o Married o Divorced

Interview questions 1. what would you expect from a ready meal business company

quality

low price

good packaging

distribution

2. which foods do ready meal

67 | P a g e

you prefer more

homemade

fast foods

restaurants

meal

3. What is your buying behavior about the ready meal? I

prefer

ready

I

will

be

I would like to

My full family

buy regularly

member prefers

meal in my daily

using

the

food menu

ready

meal

in the future 4. Which one you will recommend to be developed in the market Quality Availability New product Online Sales More items

68 | P a g e

ready meal