Innovative Business Idea: Business of Cold Drinks - Research Paper Example

Entrepreneurship and Innovation No. of Words: 2499 Executive Summary Entrepreneurship in itself holds significance since in the growing worldof business and globalization; there is a warm welcome for newer ideas and opportunities that ultimately delivers the common mass of people. Moreover, the economic status of a country also improves with the innovative businesses coming up. They give rise to fresh productivity, growth, as well as employment opportunities since with the initiation of a new business; new employees would be required for its internal operations and functions. Innovative ideas among young people are in the present times being visible to greater extents since they not only possess positive attitude, but they also have the opportunities to use their ideas and knowledge towards contributing to the business world as a whole. However, the innovative ideas generated by the youth might not always be supported in the business world owing to their lack of experience. In such cases, new ideas might remain hidden. However, in many situations this might not be the case. The present study focuses on an innovative business idea and thus reflects on an outline stating the requirements of the business in terms of market analysis, marketing and sales, operations, logistics, human resources, and financials. The innovative business that has been thought of for the report is the business of cold drinks whose basic component would be fruits but would taste like cold drinks. Table of Contents: Page 1. Statement of Who We Are and What We Are Selling………………………………,.5 2. Statement of Innovative Opportunity………………………………………………,..5 3. Market and Competitive Analysis……………………………………………………,6 4. Financials………………………………………………………………………………8 5. Marketing and Sales………………………………………………………………….,.8 6. Operations, Logistics, and Human Resources………………………………………,.9 7. Intellectual Property………………………………………………………………….12 8. Conclusion……………………………………………………………………………12 9. References…………………………………………………………………………….14 10. Appendices……………………………………………………………………………17 List of Tables: Page Table 1: UK Soft Drinks Consumption, 2003-2009…………………………………………7 List of Appendices: Page Appendix A: Projected Cash Flow Statement for the Company……………………………17 1. Statement of Who We Are and What We Are Selling: The creation of new jobs has been considered as the most significant influence of the innovations and entrepreneurships positively contributing to the economy of any country. Moreover, newer ways of performances and tasks are formed as a result of the innovative idea (Importance of Entrepreneurship, n.d.). The company that is in the plan of making is focused on manufacturing of a drink product that has the attributes of both the fruit drinks combined with cold drinks keeping in mind the health effects and thus lessening them. The name of the company has been thought to be Drinking Fruits. Thus a consumer would feel the tastes of both. The mission of the company would be to connect the taste of the product with the consumer’s preferences. The vision is to become a world class drink product company and spread across internationally reaching the tastes of consumers. In order to be successful, an effective management team would be decided. Such a team would have management team members in the divisions of Marketing, Finance, Information Technology as well as Human Resources. The top of the company would be the Chief Executive Officer or the CEO. 2. Statement of Innovative Opportunity: The uniqueness of the product lies in the combined effect of the tastes of both cold drinks and fruit drinks in a single product. This would enable the consumer to not only enjoy the taste of the product but the product would also be healthy unlike the cold drinks that are not so healthy in nature. However, although the strength of the product lies in its uniqueness, the weakness lies in the fact that the company is new and not experienced. Hence it would take time to settle and perform satisfactorily in the industry. Moreover, customers would also take time to trust a new brand. However, since it’s a new and uniquely featured product, opportunities do exist while on the other hand threats of already existent drink product companies are also relevant. 3. Market and Competitive Analysis: Studies reveal that the soft drinks sector and the drink market in the UK are fast growing and represent one of the largest industries of the nation. Since the year 1994, the annual growth in the industry has been around 8-9 percent. The market value of the industry has been significantly high and soft drinks being an attractive product for its consumers, it has been able to attract huge sales over the years (Foresight for Food and Drink: Soft Drinks, n.d.). The strength of the drinks market in the UK can be represented through its growth over the years and the customers’ demand and attraction. Although in and around the year 2004, the industry had to encounter certain new legislation rules in association with nutritional values of the drinks and others, yet the growth of the industry was not hindered (Farr, 2006). The threats for a drinks company in the UK arise from the increasing level of competition. Since there are large numbers of companies engaged in the manufacture and selling of drink products. Moreover, newer entrants are continuously entering the market, thereby increasing the threats of substitutes being available to the consumers. Health consciousness among the customers also might affect the growing sales of the products thereby having impacts on the overall profit of a company. Cost might also become a factor often that tends to drag a customer to other low cost beverages available in the market (Curd, n.d., p.4). Since the soft drinks are of huge demand, leaving the health consciousness factor for some people, the opportunities in this industry lie with the ability to enter a new market with newer products. The consumption of the soft drinks in the UK has been found to have increased over the last few years. This can be observed through the following chart: Year 2003 2004 2005 2006 2007 2008 2009 Million litres 13845 13600 13720 14175 14060 13905 14140 % change +6.8 -1.8 +0.9 +3.3 -0.8 -1.1 +1.7 Litres per person 231.5 226.3 227.1 233.4 230.3 226.5 229.1 Value, ? million 12130 12145 12415 12830 12892 12936 13224 % change +8.1 +0.1 +2.2 +3.3 +0.5 +0.3 +2.2 Value per litre, ? 0.88 0.89 0.90 0.91 0.92 0.93 0.94 Table 1: UK Soft Drinks Consumption, 2003-2009 (The 2010 UK Soft Drinks Report, 2010, p.4) Some of the companies involved in the manufacture and sale of drinks and beverages in the UK include Northern Citrus Products, Cameo, Premier Drinks, Fitzpatricks, Mawsons Ltd, among several other small and big companies (Soft Drinks Manufacturers in UK, 2012). The study of the market and a competitive analysis is essential before launching a new product or entering a new market in order to understand the current status of the market. The above mentioned factors stress on the fact that in order to deliver drinks product, the competition would be stiff. At the same time, the product being different and having a mixed sensation of both fruit drinks and carbonated waters, it might be accepted well by the consumers. A market research obtaining the views and opinions of the common people can enhance the understanding of the product’s success or failure. Also, an analysis would be required to determine the particular segment that the product can focus into. 4. Financials: The product being new in the market, in the first year the financial records for its sales would not be available. However the following financial requirements would be considered for the initiation of the plan. The three primary requirements would include: (i) initial investment requirement, (ii) subsequent cost requirement, and (iii) contingency requirement. For the initial investment, capital would be required for the equipments other structures required for the manufacture of the drink product, as well as the working capital finances for the arrangements of raw materials, supplies as well as for people involved in the process. The working capital would be required for recruitment of the management team, deciding on specifications of the product, designing and testing the prototypes, the production, marketing and administrative costs. The contingency costs would be considered keeping in view the contingency factors that might affect company or the business (Module 7: Financial Requirement, n.d., pp.1-2). A projected cash flow statement (Appendix A) and can be planned for a period of one year. 5. Marketing and Sales: Since the product is new, it can be realized that marketing and sales promotion for the product would be difficult, and harder but equally necessary in order to let the customers know of the new product and its features. In order to market the product, the product needs to be introduced and its features explained till the time customers are aware of it and get attracted in buying it. Thus, while marketing, the product life cycle of the product needs to be kept in focus (Thakur, 2005, p.156). In order to promote the launch and use of the product, it would be necessary consider some advertising of the products that may be possible through the television medium, or billboards, radio or any other media. Initially the advertising would be needed to continuously be visible or heard to the common masses. If the product gets known to the public, then the advertising can be lessened. Another part of the marketing strategy, that is sales of the product, can be influenced through the use of personal selling. Personal selling represents the process of a personal presentation of the product describing its features directly to the individual or groups of individuals thus trying to influence the purchase of the product (Madura, 2006, p.535). This method may be applied either by the activity of a salesperson carrying the product directly to the buyer’s home, that is door-to-door selling, or this might also be planned in the form of campaigns. Focus would be necessary to be kept on the fact that the difference of the product from the earlier needs to be realized by the buyer (Jones, p.325). Only then the customer would think of consuming it. The seven different ways that may prove to be helpful in the marketing of the product, as revealed by a study include: (i) having natural drama that can appeal to the customer groups, (ii) an emotional response needs to be created, (iii) the audience should be made involved, (iv) it should give rise to curiosity in the minds of the individuals, (v) presenting known information in an innovative and interesting manner, (vi) there should be some surprise for the audience, and (vii) traditional marketing rules should not be followed (7 Ways to Get Attention For Your Product, 2008). 6. Operations, Logistics, and Human Resources: A team would firstly be formed who would make all the decisions regarding the operations including manufacture and production of the product such that products may be ready for delivery on time. To achieve this, the suppliers would be chosen who would deliver the raw materials on demand. The inventory management techniques would be required to be followed efficiently such that neither too much of stocks are stored, nor there occurs shortage of products to the retailers or wholesalers. The calculation of the optimal inventory levels would enable the estimation of the needed quantities of materials. Also, techniques like JIT, Kanban, Kaizen and Lean Production would be considered with the initiation of the business. JIT or just-in-time refers to the availability of the supplied materials just in time or just before time. Kaizen is a Japanese concept focusing on improvement of production and management aspects of the product. Kanban is similar to just-in-time concept of different parts and components of products. Lean production involves an enhancement in the mass production of a particular product (Plunkett, 2009). These techniques would enable the readiness of the product to satisfy the demands of the consumers. Logistics would involve the decisions related to the transport, and supply of the products or the raw materials for the timely manufacture and delivery of products at the right places (Ballou, n.d., p.6). In order to achieve the logistics and supply chain management for the product successfully, the focus would firstly be placed on an effective team who would manage the suppliers as well as the receivers of the materials in a timely manner. For the supply chain to be effective, the culture followed within the organization would be focused keeping in view that whatever measures are taken now would affect the company’s performances in the long term. The team members also need to be involved in the sustainability of the processes such they perform in an integrated manner for a successful supply chain management. While the logistics and supply chain processes are considered, focus would also be placed on the environmental factors and other issues that might affect the company or the environment as a whole (Penfield, 2009). While a new product is launched, it would be necessary to consider an effective team of work who can handle the manufacture, marketing, and sales of the product efficiently. For this, a human resources management team would also be decided who would decide on the correct allocation of human resources at every required departments according to their qualifications and the needs of the company and the product initiation. The planning of a proper HR team would enable in the understanding of the skills and expertise of the employees of the organization thus determining the needs of new employees if required for the purpose of achieving the goals of the organization (Module 1: Human Resource Planning, n.d., p.1). Often small businesses tend to avoid the planning of HR since very small employees are part of the business. However for this particular business concerned in the study, it can be realized that the team of work would not be very small. Thus, a HR team would facilitate several functions related to the human resources. These include identification of business strategy and needs, conducting job analysis, as well as determining the feasibility of hiring (Module 1: Human Resource Planning, n.d., pp.3-9). For this particular business, the human resources management would be considered significantly since it is believed that they are the people of the organization who work and make others work as well. Also, in the process, the training and development measures would be included (Human resources, 2012). The training and development would help in the process of development of the team more because the product being new in the market, the team would require innovative thinking and delivery processes in order to attract and gain customers. Therefore, a regular training and development would keep the entire team in contact thus discusses different issues and problems leading to solutions. This section has focused on the factors associated with operations, logistics and human resources that would be considered significantly before the product is final for manufacturing and sales. 7. Intellectual Property: Considering the level of competition and the technological advancements being required, intellectual property (IP) would also be considered as a significant asset for the company. Thus the IP rights would also be tried to be obtained. For instance, patents can be obtained for the innovative products or the manufacturing processes. Also, trade secrets can be maintained thus protecting various information in regard to the company’s commercial decisions and processes (Intellectual Property as a Business Asset, n.d.). Considering the new business to incorporate a unique product to the consumers, the use and maintenance of intellectual property would be sincerely considered as well as part of the business. 8. Conclusion: Entrepreneurship is considered as significant in the world of business in the present times since new and innovative ideas are coming up and contributing to the overall economy of any country. New businesses not only present new products or services to the common mass, but also create employment opportunities for many that have significant positive effect on the overall economy. However, in order to start a new business, several factors are needed to be considered in order to successfully achieve the goals of the business. In this particular study, an innovative idea on a drink product has been considered and the different factors associated with the initiation of the business have been outlined. These factors include the analysis of the market which is of prime importance since without analyzing the market and the competitors; a new business would not realize its own position such that steps can be accordingly taken for the positioning of the business in the market as well as in the minds of the consumers. Also, operations management, logistics and supply chain and human resources management are essential parts of business that would be significantly considered for the initiation and successful implementation of the business. The required financials would also be considered and then depending on the needs, the capital and finances would be arranged. Thus, as a conclusion it can be said that with an innovative business idea in mind, entrepreneurs considering all the essential factors can initiate a successful business operation. References 1) 7 Ways to Get Attention For Your Product (2008), garrettmarketing, available at: http://garrettmarketing.blogspot.in/2008/09/7-ways-to-get-attention-for-your.html (accessed on February 29, 2012) 2) Ballou, R.H. (n.d.), Logistics, Supply Chain and Transport Management Program, cambridgecollege, available at: http://www.cambridgecollege.co.uk/coursesattachments/lsctmmod1.pdf (accessed on February 29, 2012) 3) Curd, M. (n.d.), Marketing Plan: Coca-Cola in 2015, nice-cuppa-tea, available at: http://www.nice-cuppa-tea.co.uk/marketingplan.pdf (accessed on February 29, 2012) 4) Farr, A. (2006), UK soft drinks market shows strength in adversity, just-drinks, available at: http://www.just-drinks.com/analysis/uk-soft-drinks-market-shows-strength-in-adversity_id85968.aspx (accessed on February 29, 2012) 5) Foresight for Food and Drink: Soft Drinks (n.d.), available at: http://www.bis.gov.uk/assets/bispartners/foresight/docs/food-drink/food-and-drink-soft-drinks-1994-99.pdf (accessed on February 29, 2012) 6) Human resources (2012), businesscasestudies, available at: http://businesscasestudies.co.uk/business-theory/people/human-resources.html (accessed on February 29, 2012) 7) Importance of Entrepreneurship (n.d.), yeabiz, available at: http://www.yeabiz.com/pdfs/Importance%20of%20Entrepreneurship%20-%20Justin%20Barker.pdf (accessed on February 29, 2012) 8) Intellectual Property as a Business Asset (n.d.), wipo, available at: http://www.wipo.int/sme/en/ip_business/ip_asset/business_assets.htm (accessed on March 6, 2012) 9) Jones, G.R. (2007), Introduction To Business, India: Tata McGraw-Hill Education 10) Madura, J. (2006), Introduction to business, Connecticut: Cengage Learning 11) Module 1: Human Resource Planning (n.d.), available at: http://www.sasknetwork.ca/html/Employers/hr/Module1-HR.pdf (accessed on February 29, 2012) 12) Module 7: Financial Requirement (n.d.), nptel, available at: http://nptel.iitm.ac.in/courses/IIT-MADRAS/Management_Science_II/Pdf/7_5.pdf (accessed on February 29, 2012) 13) Penfield, P. 2009, Seven Steps to Implementing a Sustainable Supply Chain, MHIA, available at: http://www.mhia.org/news/industry/8837/seven-steps-to-implementing-a-sustainable-supply-chain- (accessed on February 29, 2012) 14) Plunkett, J.W. (2009), Plunkett’s Transportation, Supply Chain and Logistics Industry Almanac 2009 (E-Book): Transportation, Supply Chain and Logistics Industry Market Research, Statistics, Trends and Leading Companies, Houston: Plunkett Research, Ltd. 15) Soft Drinks Manufacturers in UK (2012), upmystreet, available at: http://www.upmystreet.com/findmynearest/b2b/soft-drinks-manufacturers-listings-in-uk.html (accessed on February 29, 2012) 16) Thakur, D. (2005), Advertising, Marketing and Sales Management, India: Deep and Deep Publications 17) The 2010 UK Soft Drinks Report (2010), britishsoftdrinks, available at: http://www.britishsoftdrinks.com/PDF/2010%20soft%20drinks%20report.pdf (accessed on February 29, 2012) 18) The Importance of Entrepreneurship (2008), OECD, available at: http://www.oecd.org/dataoecd/53/24/41664503.pdf (accessed on February 29, 2012) Appendices Appendix A: Projected Cash Flow Statement for the Company (1 year period) Particulars Amount (in ? millions) OPERATING ACTIVITIES Net income 3,000 Depreciation and amortization 800 Equity income 500 Other operating charges 400 Other items 300 Net cash provided by operating activities 5,000 INVESTING ACTIVITIES Acquisitions and investments (500) Purchases of investments and other assets (100) Proceeds from disposals of investments and other assets 300 Purchases of property, plant and equipment (800) Proceeds from disposals of property, plant and equipment 80 Other investing activities 200 Net cash used in investing activities (820) FINANCING ACTIVITIES Issuances of debt 1500 Payments of debt (2000) Issuances of stock 100 Purchases of stock for treasury (600) Dividends (1000) Net cash used in financing activities (2000) BALANCE AT THE END OF THE YEAR 2180 Read More