Vision and Mission Set For the New Venture of Fast Food Business - Coursework Example

Entrepreneurship Table of Contents Assignment 3 Introduction 3 Vision and Mission Set For the New Venture of Fast Food Business 3 Objective of the Business Next Five Years 4 Literature Review 5 Critical Analysis 8 Conclusion 10 Assignment 2 13 Introduction 13 Literature Review 13 Critical Analysis 15 Process of Budgetary Control 17 Ways to Produce Sales Forecast 18 Sales Forecast Time Horizons 19 Conclusion 20 References 21 Assignment 1 Introduction This research study illustrates about the selection of a small restaurant business to be established in London. Qualitative analysis pertaining to market research has been conducted to determine a plan to establish a small fast food restaurant which is demanding in this competitive business location. The business will serve hamburgers and sandwiches along with various healthy foods and drinks to its customer. Various market and business analysts have been consulted to get an idea regarding the fast food business and prospects for effective competitive advantage and growth of small business. It has been expressed by analysts that fresh cold sandwiches ingredient with green vegetables are abundantly desirable among the various levels of people. Hence, after analysis of different business analysts’ views and market researchers, it has been decided to start a fast food restaurant business in London. Hence, as an entrepreneur, it is essential to build plan and execute a start up fast food restaurant business in the competitive market of the London. Based on the market research, the restaurant will be serving fresh and healthy hamburgers and green vegetable sandwiches to the customers. Paramount importance will be provided on service and food quality to ensure greater customer satisfaction. The interiors of the restaurant will also be considered as an important aspect for attracting substantial customer base. Accordingly, the restaurant will be furnished in traditional style revealing the local culture of the UK. Vision and Mission Set For the New Venture of Fast Food Business Irrespective of the size of the organisations, structured vision and mission are essential element for channelizing the efforts towards the specific direction. Correspondingly, the vision and mission of the restaurant are driven by the goals of achieving competitive advantage and profit-maximization along with securing growth in the foreign market. The vision of the restaurant is to deliver utmost customer satisfaction through deliverance of healthy food items at affordable prices. Similarly, the mission of the restaurant is to achieve the position of being most promising and leading competitor in the fast food business industry in the UK and to attain rapid expansion in other parts of the world as well (Gartenstein, n.d.). Objective of the Business Next Five Years Businesses, irrespective of size have foremost objectives to achieve extreme competitive traction and customer satisfaction to ensure profitable growth. Correspondingly, below is the list of objectives which the restaurant intends to achieve within the five years’ time frame. To deliver utmost customer satisfaction experience by providing fresh and healthy food and enjoyable relaxation environment. This will generate customized interest and attraction of customers to consume the various items served by the fast food business To lower the operating cost and enhance the customer base without compromising with the quality of food and services Attain maximum profit during the peak seasons To bring constant improvement in the infrastructure and designing of the restaurant. To cover the 75% of the fast food market in the UK To double the sales of the revenue and expand business outside the UK Literature Review In the globalized era, a business organisation undertakes different international expansion strategies to flourish successfully in the overseas market. Against this backdrop, few prominent foreign market entry strategies are discussed below with prime focus on franchising. Strategic Alliance According to Heinecke (2011), in the contemporary business environment, strategic alliance has become extremely important for a business organisation to attain greater competitive advantages in the worldwide market segments. A strategic alliance is formed between two or more companies mutually agreeing to work in a collaborative manner. Different factors are identified to motivate strategic alliance. In this regard, one of the prime motive for which strategic alliance is formed involves the willingness of the parent company to penetrate into new foreign markets. Besides, risk mitigation and cost reduction intention of the companies also motivates the formation of a strategic alliance (Heinecke, 2011). Exporting and Importing According to Twarowska & Kakol (2013), the term ‘exporting’ is regarded as the procedure of selling any particular product or service, which is produced in one specific nation to other nations. Notably, exporting is of two types that include direct exporting and indirect exporting. Generally, direct exporting refers to the direct involvement of firms in marketing products specifically in foreign business markets. On the other hand, indirect exporting signifies unforeseen engagement of firms in marketing products especially in overseas markets. Importing is viewed to be an excellent market entry strategy, which aids in reaching into new national business markets with existing products or services (Twarowska & Kakol, 2013) Licensing Apart from exporting along with importing, licensing is duly considered another option or strategy to enter into any overseas business market with limited extent of the risks. Twarowska & Kakol, (2013) observed that in this particular approach an overseas licensing firm provides a licensee with trademark rights, copyrights, patent rights or know-how on specific products as well as operational procedures. In return, the licensee would eventually produce the products of the licensors, market these products in his/her consigned region or territory and most importantly pay royalties as well as fees associated with the product sales. It is worth mentioning that most this type expansion strategy is of most favoured one from the standpoint of the host country as it tends to bring technology know-how in the respective nations (Twarowska & Kakol, 2013). Franchising In the words of Twarowska & Kakol (2013) the strategy of franchising is principally described as a system wherein semi-independent business owners i.e. the franchisees often pay royalties as well as fees to a particular parent company i.e. franchiser for attaining the right to become recognised with its trademark and often for using business format along with system. In addition, franchising is the collaboration of licence acquired in the trade, retail sales of products and services, operation and management system of the business. Franchising is segregated between franchisor and franchisee. In case of Franchising, the franchisor procures the licence of doing the business through delivering equipment’s, packaging materials and ingredients of the products and services whereas franchisee who deals in particular business of the products and services (International Franchise Association, 2014; Twarowska & Kakol, 2013). Franchising business has certain advantages and disadvantages which delivers positive and negative impact on the competitiveness and the profit earning capability of the business. It has been observed that franchisee focus towards delivering effective attention and capital to the business. Franchisee reveals the utmost enthusiasm and effort in enhancing the volume of sales and revenue growth of the business which have a positive impact on the ability of the franchisor to maximize the profitability. Moreover, the franchisee through distribution of the product in the retail section delivers the competitive strength of the distribution system and customer recognition enhances the brand value of the product. The franchisee also generates a strong image among the distribution networks through retail presentation, operational compliance, and marketing methodology which leads to competitive advantage and profit maximization of the business (International Franchise Association, 2014; Twarowska & Kakol, 2013). Thus, it can be argued that Franchisee plays a vital role towards expansion of businesses in various areas of overseas. They deliver capital for investment as well as information about the appropriate location to the franchisor. They consult with the franchisor, obtain, and develop outlets for new establishment of the franchising business. The franchises avail better locations of outlets and stores which leads the franchisor to gain market share and economies of scale. Franchising constructs customer recognition, product, and service understanding which leads to expansion of the network. Nevertheless, this type of business expansion strategy is also argued to owe certain limitations. Accordingly, franchising incurs huge expenses in terms of preparing agreements, Uniform Franchising Offering Circulars (UFOC) and related documents due expansion of its franchisee holding in various states (International Franchise Association, 2014; Twarowska & Kakol, 2013). Critical Analysis The restaurant will be operating in London and will be providing quality food and services to customers visiting the outlet. The restaurant intends to offer hamburgers and sandwiches along with healthy and preservative London fries, chicken noodles, and fresh poured fruit drinks (Employment and Social Security, n.d.). The phenomenon of globalisation has offered business organisations with the opportunities to expand its business beyond the national boundary. In order to reap the benefits provided by the globalisation many business organisations are constantly involved in expanding its business to overseas market while most of the companies have been successful in penetrating the foreign market and reap the benefit laying there. However, it is worth mentioning the selecting the foreign market entry mode is often very challenging and involves huge risks. The failure of an organisation to make appropriate decisions regarding the foreign market entry is associated with huge financial as well as non-financial loses. Thus, it is vital for any organisation, including the proposed restaurant to critically analyse the foreign market environment as well as its own ability prior making decisions regarding the foreign entry strategy. There are various strategies pertaining to foreign market entry, including joint venture, licensing, and Foreign Direct Investment among others. However, in the recent years franchising has emerged as one of the most apt strategy for penetrating foreign market. It is worth mentioning the franchising with respect to food and beverage industry is argued to be the most suitable strategy for entering into the foreign market. Evidently, the effectiveness of franchising strategy can be equated with the immense success of McDonald which is one of the leading players in the global food and beverage industry (McDonalds Corporation, 2014; International Franchise Association, 2014; Twarowska & Kakol, 2013). The franchises play a vital role towards expansion of businesses in various areas of overseas. They deliver capital for investment as well as information about the appropriate location to the franchisor. The Franchises avail better locations of outlets and stores which leads the franchisor to gain market share and economies of scale. Franchising constructs customer recognition, product, and service understanding which leads to expansion of the network (International Franchise Association, 2014). Thus, it can be comprehended that this market entry of franchising will be an appropriate strategy for the restaurant to expand its business in the overseas market. Apart from these, the franchising approach is also argued to be beneficial for the company by a certain level as it is claimed to certainly assist ventures towards strengthening their managerial capabilities at large (International Franchise Association, 2014; Twarowska & Kakol, 2013). Besides, the franchising as the market entry strategy is also anticipated to deliver the restaurant to incur low expenses and lower political risks while expanding its business in overseas market. In this regard, franchising is the collaborative work procedure of franchisor and franchisee. Franchisor relies upon low overhead costs regarding selection of site, franchisee, opening assistance and training which expenses are not covered by prior franchisee fees. The franchisee had to pay all the consecutive cost in relation to franchising such as leasehold improvements, furniture and fixtures, equipment, inventory and working capital essential for establishment of outlets for franchising (International Franchise Association, 2014). The franchisors can generate excessive revenue of profit through low investment of capital, which leads to them further expansion of businesses (International Franchise Association, 2014). The franchisors due to effective competitive and profitable growth in business performed reacquisition of franchisees to expand the level of the business. This is also anticipated to deliver more recognition of quality and reliability by the customers in terms of the products and services offered by various franchisors of the businesses (International Franchise Association, 2014). Accordingly, it has been observed that managers and other effective staffs of the franchisee business are all proficient and experienced in the field of franchising. They deliver competitive work performance to achieve profit-maximization growth toward the business. Various experience staffs of the similar sectors get involved to be as franchisor of the business. They have overall view and experienced about the tendency and requisite condition of the market. This leads to enter small areas of markets as it is owned but not company outlet so franchisor will focus to gather more range of the markets (International Franchise Association, 2014). Conclusion It can be noted from the above discussion that the restaurant will be initially operating in London and will offer an assortment of food products to its customers. The objectives of the restaurant are driven with the goal of earning maximum profit. Nevertheless, the restaurant is also determined towards expanding its business in the foreign market. In this regard, franchising as a mode of foreign market entry strategy is anticipated to be suitable for the expansion of business in the overseas market. It is anticipated the franchising will offer the maximum advantages for the company to attain its short-term as well as long o goals and objectives. In addition, it is projected that the restaurant will be eligible to avail the advantages of increased control in the foreign market by adopting franchising as the foreign market entry strategy. Besides, it is also reckoned that franchising will facilitate the restaurant to penetrate into the foreign market at reduced cost while ensuring maximum control over the franchisee located in the foreign market. Thus, it is firmly believed that franchising will be the most suitable strategy for the restaurant to expand its business in the overseas market. References Employment and Social Security, No Date. Restaurant Start up Quick Guide. Getting Started In The Food Business, 1-31. Gartenstein, D., No Date. Objectives in the Restaurant Industry. Demand Media. [Online] Available at: http://yourbusiness.azcentral.com/objectives-restaurant-industry-7861.html [Accessed October 16, 2014]. Heinecke, P., 2011. Success Factors of Regional Strategies for Multinational Corporations. Contributions to Management Science, pp. 13-62. International Franchise Association. 2014. Expanding a business by franchising. Franchise Industry, 1-183. Twarowska, K. & Kakol, M., 2013. International Business Strategy - Reasons and Forms of Expansion into Foreign Markets. Knowledge Management and Innovation, pp. 1005-1011. McDonalds Corporation, 2014. Franchise Opportunities. Franchising. [Online] Available at: http://www.mcdonalds.co.uk/ukhome/Aboutus/Franchising.html [Accessed October 16, 2014]. Table of Contents Assignment 1 3 Introduction 3 Vision and Mission Set For the New Venture of Fast Food Business 3 Objective of the Business Next Five Years 4 Literature Review 5 Critical Analysis 8 Conclusion 10 Assignment 2 13 Introduction 13 Literature Review 13 Critical Analysis 15 Process of Budgetary Control 17 Ways to Produce Sales Forecast 18 Sales Forecast Time Horizons 19 Conclusion 20 References 21 Assignment 2 Introduction The study illustrates about the importance of sales forecasting for an entrepreneur of establishing a new fast food business (restaurant) which is based on business to customer (B2C) business model. The restaurant business plan was developed based on the market research findings. Accordingly the market research findings revealed that in the recent times the food and beverage industry in the UK has been growing at the significant rate. At the same time, it was observed that the London has been one of the leading tourist destinations for visitors across the world. Accordingly, the city is observed to attract millions of visitors including both business travellers as well as leisure visitors. Besides, the trend of increasing tourist is anticipated to rise in the forthcoming years as well. Correspondingly, a huge opportunity is identified for the restaurant business in London. Not only in the UK, but at the same time, tourism is ascertained to increase globally, thus providing an increased level of opportunity for the restaurant business to expand in the overseas market. Literature Review Singh (2009) noted that revenues and the profits are the essential element of any business while the sales forecasting is an effective indicator of the financial health of any business. In the current highly volatile business environment the sales forecasting is advocated to be an essential requirement for planning the future course of action. It has been argued that sales forecasting need to be integrated with all other components of the business operation. In addition, it has been claimed that the sales forecast is an important aspect of a business venture’s budge, which allows it to anticipate cash flows as well as monitor and execute control on operating costs. With respect to start-up businesses, it has been affirmed that sales forecast enables the start-up venture to measure its ability to meet the sales target. Nevertheless, it has been argued that improper sales forecasting often has unfavourable impact on the profit earning capacity of a company which is followed by poor financial as well as operational performance of the company. In addition, it has been claimed the effective sales forecast facilitate in predicting likely demand and devise planning according to the sales forecast information. The sales forecast is also argued to force the business to be future oriented and anticipate opportunities for making effective investment decisions. The sales forecasting is also recognised to reduce the employee layoffs and motivate them to render their best efforts towards the accomplishment of the targeted sales figure. In addition, it has been determined that different methods of sales forecasting are applied by business organisations. In this regard, few prominent methods of sales forecasting are ascertained to be judgment based forecasting, statistical forecasting and external causal factor-based forecasting. Judgment based forecasting is argued to be relying more on the sales personnel, directly engaged in the conversation with the customers. Statistical forecasting is identified to rely on the historical trend. On the other hand, external causal factor-based forecasting is determined to rely in the industrial predication and competitive structure within the industry (Singh, 2009). The sales forecast is an essential tool to analyse the market in business to business as well as business to customer environment. This can be done two different phases of B2B and B2C market analysis. The various factors which should be taken into consideration in B2B segment are driven relationship, sales closing, extensive product knowledge, higher end pricing. These factors are fulfilled with extreme support of directors and experienced professionals in sales. Sales forecast delivers the graph about the effective and non-effective business areas to company growth. This also gives monthly to annually based reports about the accurate status of growth of sales of the business. Sales managers must have extensive knowledge and idea about the associated product and services. They had convinced them with delivering information about the quality and reliability of the products and services to finalize a business proposal with other adjacent business entrepreneurs. Sales forecasting also gives customized support towards analysing the profit in relation to sale and make expert professionals to deliver effective measures towards achieving more profit compared to sale (Peng, 2014). Critical Analysis With respect to the restaurant business, sales forecasting is identified to enhance the ability of entrepreneur to build strong relationship with various stakeholders and attain reliability through deliverance healthy and fresh fast food items to the customers. This will further enhance the ability of the restaurant to expand its business within and outside the home country. Sales forecasting is also ascertained to help entrepreneur to create franchises to expand its business which gives the added advantage towards deliver low investment with excessive profit (Peng, 2014). Initial Budget Forecast   Monthly Cash Needed % of     Expenses to Start Total Source of Estimate MONTHLY COSTS         Salary of owner-manager £ 500.00 £ 1,000.00 5.0%   All other salaries and wages 800 2,400 12.0%   Rent 900 2,700 13.5%   Advertising 200 600 3.0%   Delivery expense 100 300 1.5%   Telephone 100 300 1.5% Phone company Other utilities 200 500 2.5%   Insurance 200 200 1.0%   Taxes, including social security 300 1,200 6.0% Accountant Interest 100 300 1.5%   Legal and other professional fees 100 300 1.5% Attorney Miscellaneous 100 300 1.5%   Subtotal   £ 10,100.00 50.5%                       ONE-TIME COSTS         Fixtures and Equipment   £ 5,000.00 25.0%   Decorating and remodelling   1,000 5.0%   Installation charges   500 2.5%   Deposits with public utilities   1,000 5.0% Electric company Legal and other professional fees   500 2.5%   Licenses and permits   500 2.5%   Advertising and promotion for opening   400 2.0%   Cash   750 3.8%   Other   250 1.3%   Subtotal   £ 9,900.00 49.5%             TOTAL ESTIMATED START-UP CAPITAL   £ 20,000.00 100%             The above presented table illustrates the initial budget argued for the establishment of the restaurant business in London. Accordingly, it is estimated that the establishment of the restaurant would require the initial capital of £ 20,000.00 during the first month of its establishment. In order to meet the capital requirement the bank loan amounting £ 15,000.00. The remaining amount of £ 5000 will be sought from friend and relatives. Sales Forecast Unit Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Meals 1,822 2,552 2,012 2,693 2,269 3,056 Drinks 7,006 9,809 8,023 1,016 1,103 1,236 Restaurant merchandise 25 65 102 110 123 150 Total Unit Sales 8,853 12,426 10,137 3,819 3,495 4,442               Unit Price             Meals £15.00 £15.00 £15.00 £15.00 £15.00 £15.00 Drinks £5.00 £5.00 £5.00 £5.00 £5.00 £5.00 Restaurant merchandise £8.00 £8.00 £8.00 £8.00 £8.00 £8.00               Sales revenue             Meals £27,330.00 £38,280.00 £30,180.00 £40,395.00 £34,035.00 £45,840.00 Drinks £35,030.00 £49,045.00 £40,115.00 £5,080.00 £5,515.00 £6,180.00 Restaurant merchandise £70,824.00 £99,408.00 £81,096.00 £30,552.00 £27,960.00 £35,536.00 The above illustrated table presents the sales forecast for the restaurant for the first six month period after its establishment. Accordingly, it can be seen that the total sales of the restaurant will remain low during the first three months of its commencement. After the third month, it is anticipated that the total sales of the restaurant would gradually start rising. Process of Budgetary Control A process of budgetary control is considered as an effective accounting tool for any organisation. In this regard, it has been observed that an organisation apply budgetary control to implement strategy. The process is considered as an integral component of management that helps to judge it’s financial as well as operating performances as well as motivate employees. Notably, master’ sales forecast are considered as the essential component of budgetary control. Accordingly, it has been argued that master sales forecast facilitates in accurate budgeting. Besides, most of the sub budgets are derived from the ‘master’ sales forecast which is generally disaggregated by area, product line, customer, size, time of year, season among others. It has been observed that in order to prepare accurate sales forecasting, a good sales strategy along with a comprehensive understanding of consumer behaviour is required. Notably, a reliable sales forecast seeks the combined efforts of production, sales, and the finance unit of an organisation (Ostergren, 2008). Thus, it is observed that in order to prepare good sales forecast an organisation should devise appropriate strategy and select the most suitable model that best suit the needs of the business. Ways to Produce Sales Forecast In the contemporary business world, forecasting is essential for attaining economic welfare. Accordingly, sales forecasting is ascertained to deal with numerous problems due to lack of adequate data and uncertainties associated with the continuous evolution of new technologies. Correspondingly, several forecasting models have been formulated ad used by different business organisations. The sales forecasting models are generally categories into two groups including quantitative and qualitative. The quantitative sales forecasting method includes moving averages, exponential smoothing, regression and other econometric. Accordingly, exponential smoothing method is used for deriving forecast based on exponentially smoothed weighted average of trends, past sales and seasonality. Moving average model is argued derive forecasting based on an average past observations. Regression analysis is ascertained to relate sales to one or more explanatory variables such as price changes and competitive information (Virginia Tech, n.d.). On the other hand qualitative forecasting model are generally associated with long-term forecasting. Executive opinions, sales force composite and a survey of buyer’s are recognised as few widely used qualitative forecasting models. Executive opinions are based on the rational opinion of many experts to forecast sales. The primary objective of the executive opinions is to turn experience and judgment into a formal forecast. The sales force composite collects forecasts from individual salesperson involve in sales activities of a particular territory. The usefulness of this method largely relies on the reliability of the data submitted. A survey of buyer’s explores intention of a target market to buy at a certain specific future time. Analysts provide buyers with a description of the product and/or service in anticipation that respondents will render honest answers. In addition, certain external factors, such a recession, or technological changes may influence respondents’ willingness to purchase after the completion of the survey (Virginia Tech, n.d.). Sales Forecast Time Horizons Differences in time horizon are critical factors influencing the reliability and accuracy of sales forecast. Accordingly, while preparing a sales forecast, it is essential to determine the specific time frame for the prediction. Usually sales forecast is categorised as short-term, medium term, and long-term. Accordingly, different techniques are considered suitable for different time horizons. Econometric techniques are generally regarded as being more applicable for longer term forecast while on the other hand moving averages and exponential smoothing models are frequently used to produce shorter term forecasts. Moving averages relate to the ability to find ideal quantitative relationships amid dependent variables. Econometric analyses are rigid methods and require expertise to implement it. A moving average is commonly used with time series data to smooth out short-term fluctuations and highlight longer-term trends or cycles. Conclusion The above discussion revealed that the restaurant business is based on the B2C business model. Significant opportunity has been observed for the restaurant in London. Various factors can be associated with the establishment of restaurant business in London. In this regard, the growing tourism and the rapid growth in the food and beverage industry can be closely associated with the future prospect of the restaurant. It has been observed that sales forecasting is an essential component for start-up venture like the restaurant. In this regard, sales forecast is ascertained to aid business the restaurant to anticipate cash flows as well as monitor and execute control operating costs. Different sales forecasting models have been determined to be applied by business organisation in the current volatile marketplace, which are segregated into quantitative and qualitative forecasts. The sales forecast horizon time is also determined to be an important aspect for ensuring accurate sales forecast. Responsively, sales forecast is prepared for short-term, medium-term and long term period. Regardless, the sales forecast models selected for forecasting, it is essential that every unit within an organisation are involved in the drawing effective forecasting. Accordingly, integrating sales forecasting with the various facets of the management is identified to render reliable and accurate forecasting necessary for framing business strategies for the successful performance of the business in the current volatile market place. References Ostergren, K., 2008. Management control without budgets: A Field Study of “Beyond Budgeting” In Practice. NHH Norwegian School of Economics and Business Administration, pp. 1-30. Peng, W., 2014. Entrepreneur Sky. B2B Vs B2C. Which Business Model Should Your Start-up Choose. [Online] Available at: http://entrepreneursky.com/b2b-vs-b2c-business-model-startup-choose/ [Accessed October 16, 2014]. Singh, N., 2009. The Importance of Sales Forecasting in a Recessionary Economy. Financial Planning, pp. 1-2. Virginia Tech, No Date. Overview of Forecasting. Literature Review. [Online] Available at: http://scholar.lib.vt.edu/theses/available/etd-02072001-164547/unrestricted/03chaptertwo.pdf [Accessed October 16, 2014]. Read More