EuroFlorida Analysis - Assignment Example

Running Head: Business Plan - EuroFlorida EuroFlorida Academia Academia Research Executive Summary The business plan includes the idea of selling property to the people who can afford it. The location is not a usual one but it is in Italy, Apulia. The target audience is located in the entire Europe, because of this fact we need to hire estate agents and sales force in the entire Europe so that the best people can be our customers. The pricing is very reasonable, though it is value based pricing, as we would be providing them with homes that are having frills attached with them. The idea is to construct ten houses in the heel of Italy and then market them. The break even would appear when the company would be able to sell eight of those houses. In order to ensure that we have best customers, we would use internet as our marketing tool alongside estate agents and sales force, the benefits of registering and payment through internet website would be provided to the people only living in Europe. The houses would be sold on first come first serve basis, however if received so many applications then we can sell them on random basis to top class people. The team would be comprised of development department, which is of course the most important one, customer relationship department, marketing department, and finance department. If the houses would not be sold to any one and we would be failed to communicate and attract audience then there is a contingency plan that is to sell the houses on no profit no loss situation and then we would come up with some new idea, however we would reapply the construction procedure if the scheme would be successful. Also we would have all the houses insured, so that if any natural calamity destroys them, we do not face any loss. Business Idea Our Unique selling proposition would make the audience realize that there must be something of value and it would also serve as an emotional appeal. The USP would be: "We are making the future peaceful for you, simply not just by providing you a shelter in your dreams but also by providing you a big part of your dreams where you can go whenever you want and get whatever you want." The prevailing problem in the Europe is that people are living extremely busy and fussy life in Europe, the weather is most of the times very rainy and no body gets the chance to spend vacations and life outside the fewer European countries such as Greece and Italy. It has been identified on exploring Europe that in Italy there is a place which can become a heaven for the people of Europe facing various difficulties in life, these people are of course having a desire to visit places that are new, green and fresh forever. So there is an opportunity that we finally identified and now there would be some work to do on that idea, the idea that is simply related to providing a lifetime opportunity to people of Europe by providing them a home in a heaven in Apulia, Italy. The basic idea behind starting a housing scheme named "EuroFlorida" in Apulia, Italy is to target the people from the northern side of Europe who do not have any chance to visit somewhere within the Europe, as you can see that those people are catered as the target audience who have the buying power, who want to pass either their vacations or their life in a peaceful lush green environment which is absolutely free of pollution, also the people who are catered as target audience are not just limited to the northern Europe but any one who is having a desire to visit the most beautiful place in Italy and also who is having some buying power is recognized as the target audience. The retired people who want to spend their life in a peaceful environment are also our target audience. The competition is some how not just present in Italy but it is present in the entire Europe but the difference appears in the price and the size of the living places where EuroFlorida is having an edge on the other competitors. Porter's Five Forces -Rivalry: The rivalry is automatically being generated as you can see that the prices are increasing in the southern Europe and yet there is no one to provide such product in the other regions of the Europe. It is a very much renovating idea as the Italy was already a destination which has provided numerous of such products to the people and they were willing to see a new change on for which they could start getting back to Italy, it was because of this opportunity that now there is an entrance of another firm named "EuroFlorida". Threat Of Substitutes: As the idea is already floated in the market about the Apulia, therefore there is a possibility that most of the property sellers would start generating new ideas, perhaps there main focus would be on sales promotion if not innovation or they would start doing both of them in order to attract the same buyers, this is a very clarified concept that there must be some contingency plan for such acts by the competitors and that is another reason for using "Sales Force" that is stated afterwards in this idea with greater details. Buyer Power: Of course the buyer is the ultimate source, which can make the company's plan successful, as they have the power in terms that there is a real competition in the market, and eventually it is quite obvious that competition is something in which the third party (Customers) takes the benefit. So the buyers are the one who should be convinced rather than any other. Supplier Power: Suppliers are also very powerful indeed in this scenario as the entire property would be sold after purchasing it from someone, however the place currently is having no great value, it is just identified as a luxury place but the people holding property there have not yet identified its true value, so they are not very difficult to be convinced over selling the land they are possessing. The supplier can also be government, which is of course always looks for profitability, which is in their favor. The government can also be convinced, as the revenue that would be generated would take part in the Italy's economy. Barriers to Entry: The Barriers are of course present there as there is already a competition in the market of the entire Europe. The barriers that would be upcoming, would definitely include the actions of competitors, may be they would bring in their best to buy our estate agents that is why the idea of hiring them only for one year was suggested so that there is no long term threat that we could face, but yet these barriers can be crossed as the company is having a complete action plan and also there is a possibility that the competitors would be irritated by the idea and they would ask the governmental support but a fair contract with the government at a very early stage would be a very good option. SWOT Analysis Strengths: The plan is different than the others in the market. The people outside the native country of the company are also brought in to the team, and the place was never perceived by anyone before as a luxury product. Also the pricing is very reasonable and there are frills attached such as plumbers and electricians that would be provided for services to the customers. Weaknesses: The company is facing competition in the entire Europe, many of its actions are related to cost effectiveness, and the product requires a lot of convincing and persuading than others. We are also dependent a lot on estate agents through out Europe. Opportunities: People were never aware of such a beautiful place in Italy. No competitor had such place in mind, and the marketing plan would be unique, that is the promotional efforts would be much emphasized through Internet. Every year there are millions of people who get retirement, also there are people in Europe who are now intended towards going somewhere else, they might be thinking of exploring Europe and what is better for them than EuroFloride. Threats: The entire plan is in the hands of the Government of Italy. There is a lot of prevailing competition, and there are even bigger companies who can control the situation in their favor. The government has more power than any one, if some restriction would be placed tomorrow then product would be endanger and also the product is vulnerable to any natural calamity which is avoided here the most. Background More and more frequently, the "grey gold" of north Europe (Scandinavia, Germany and the UK) are liquefying their assets and moving to south Europe. Their destinations are Spain and south France. Indeed in Spain a large building industry has started up building "pensioner complexes" to cater for the market, similarly in south France, house prices are rising significantly. Smaller markets in the English-speaking Med (Gibraltar and Malta) have seen very dramatic rises in real estate value. Apulia (the "heel" of Italy) is a relatively undiscovered region. Prices are very reasonable and indeed for a decade Apulia was the poorest region of the (old) EU. The infrastructure, however, is excellent, with an airport at Bari, a motorway all the way to Vienna and the European net, excellent train connections within Italy and by ferry to Greece. Climatically Apulia is the second most "blessed" region of the EU, after Portugal's Algarve. Temperatures are, however, not extreme and the landscape is lush, fertile and green. It is an area of small industry, as well as being extremely rich in culture & history. Ownership & Company Structure The company that is initiated for serving the people of Europe is "EuroFlorida". The company is having no complex structure, the idea is initiated by the proprietor which means that it is neither a partnership nor a corporation, which automatically brings us to the point that the company would have no stocks available in the market, it would be handled by a single owner though a team of people is required which also includes the middleman in the form of small network of real estate agents. The idea is to hire the estate agents in the Apulia, it is fair enough but yet we need to bring in contact one big estate agent from the countries like Germany and UK. The selection of estate agent in these two countries would be according to the business they are obtaining. There is another suitable strategy that can be used by the company alongside the smaller network of agents in Europe and that is to have few sales people hired by the company in different regions of Europe. As the product is sensitive in nature and as the market in not wide spread therefore there is a segment in the Europe known as top executives who can potentially buy the product if persuaded on person-to-person basis, thus the work of sales force would be to identify such people and then ask them to buy the product, mentioning that the sales force would be hired only on commission basis rather than fixed salaries which would then be in relation to cost effectiveness. The overall size of the organization keeping the estate agents and sales force and managers would be nearly forty people. The Team The team is comprised of the owner, which is basically an entrepreneur and the idea generator. The entire planning is done by the entrepreneur and after that the team includes only managers with one general manager. The various departments are customer relations, marketing, finance and development which has relatively a bigger work to perform but the labor would be hired on wages which means that they are not involved in the managing team but they would work for the company in various ways. The development department would have to perform the real work, this includes the identification of the property and starting the construction work wherever possible, and they are also in contact with the labor. The customer relation department would perform the work of identifying the potential customers and than use the sales force and other estate agents to make them the real buyers. The estate agents would also come under the customer relation management. The next one is marketing department, which is there to fill the gaps in the segments. It is quite strange that the company is believing on both the personal selling and advertising, but the basic purpose for doing them is that there is a segment which has the buying power but is not aware of the services being provided (personal selling), secondly there is a segment which is aware of all the service but needs to be reminded (advertising). The next department is finance, which includes all the loan terms and conditions, the buying and selling transactions and the cost controlling, without which the company can suffer heavy losses. The company would be an equal opportunity employer and also the managers that would be hired would not only be highly competent but the idea is to hire people who have some experience in Apulia property business, no matter they are very qualified or not. The professional help would also be required from the lawyers, as they would help the company in persuading the government. The product The product as you must have identified by now is property. The term property includes a complete house, which is well designed and is relatively different than other houses in Italy. The entire idea is to sell a place, which the customer feels free to go at any time to reduce stress and also to spend vacations. The houses that are being sold by "EuroFlorida" are different than others in terms that they are complete houses built rather than complex apartments. The prices are also very reasonable unlike in France and Spain, and also the designing would be a lot more professional than the other housing projects in Europe. The customers are provided with so many of the facilities if they are interested in buying houses, such as apart from the people who can buy a complete house with fringe benefits such as the completed electricity work, entire water and sewerage system, telephone connections and cable networking for television in just one payment, the people who cannot buy it in one payment are allowed to pay the installments for even 10 years, but they would just have to pay 10 % extra on overall, but this would ensure them a safe and secured place to live. People are also allowed to get loan from our finance department rather than going at some bank but in this case they would payback the loan in 40 years maximum but the interest rate would be 6%, also this would be in relation to their work and their job security so that there would be no failure tomorrow. We would look for complete security and profitability with a complete client satisfaction. Other services would also be provided to the customers alongside loans such as our customer relation department would provide them for any plumber, electrician etc. just on for a call, for this purpose the department would also have to get help from the electricians and plumbers of that area. The house would although be completed and would require no help in the reconstruction yet if the customer would be willing to make few amendments or extra construction then they would be provided with the workers on wages but this investment would be done completely by the customers, the company's job is to provide the customer with a reliable labor force. The Marketing Plan The Target Market: The best thing about our business plan is that we have the target market in the entire Europe, one cannot say that our services are just limited to the Italy, or UK or Germany, but we are catering every individual who is working in a career oriented organization, who is a single or having a family, or who is a retired person and willing to settle somewhere else, or some one who is having the business of purchasing the property and then selling it tomorrow to someone else, or even someone who is willing to give the property on the rental basis. The entire idea says that we are not just working on B2C relationship but also B2B relationship. Of course there are big gaps in the segments or there are people who are unaware of the product and services we are offering. The promotional Effort: The Internet marketing is the best option for the company, it is so because it is not requiring a big investment and also it would communicate the advantages of the product to both the target audience and also the people who are not target audience but yet can potentially buy the product. The benefits provided to the people would include online registration and payment, which means that there would be no greater fuss for both the customers and the company, however the internet security system that would be used is quite expensive as the internet crimes are prevailing, but the online registration would save the time of both the customer and the company, also the website would include the contacts of the nearby state agents (small network), this would help the company in getting the better results and would be able to identify the role of estate agents in marketing the product. There would be other ways to promote the product such as getting the email addresses of executives and small business owners through sales force and then mailing them about the product, highlighting its benefits, and also giving them a call for the purpose of proving the scheme to be genuine. Asking the estate agents to remind their old clients about this new product. This would help the company getting the customers from all four dimensions and through the reference of all the employed and related people. The marketing would be emphasized in the first year of the project the most, and after wards just based on the estate agents and sales force, while providing website as the base for the customer to get registered. The ads would also be shown on Yahoo and Google's Ad service, also we would be advertising on the websites of the various countries of Europe and also few thickly populated cities such as London. Customers & Competitors We are catering every individual who is working in a career oriented organization, who is a single or having a family, who is a retired person and willing to settle somewhere else, or some one who is having the business of purchasing the property and then selling it tomorrow to someone else, or even someone who is willing to give the property on the rental basis, the entire idea says that we are not just working on B2C relationship but also B2B relationship, of course there are big gaps in the segments or there are people who are unaware of the product and services we are offering. This means that people from all around the Europe, who are whether having few above mentioned qualities or not and who are buying our product through any means are coming under the banner "Customers". It is quite obvious that our competitors are also present all around Europe, they are not simply limited to Italy or UK or Germany, but most of them are strong enough in the southern Europe, that is France and Spain, as the people are more interested in viewing the newly discovered places and they can pay anything for that. The competitors are quite much aware of the fact that EuroFlorida is going to take off and there business is endanger, so we can also expect sheer reactions from them, but this should not demoralize us. Thus we have to keep an eye on competitor's reactions as well as to ensure that our marketing plan works effectively. Agreements & alliance As we have discussed previously that I would initiate the business as a sole proprietor, thus there is no need of any such alliance, however we would be requiring a lot of help from the estate agents through out the Europe, as the scheme requires their support to be a successful one. For the purpose of attracting the best potential customers from all around Europe, we would have to have agreements with the estate agents with in the Europe. One thing that should be kept in mind is that we would have to reach them on self basis and the agreement would only be done with the agents who are into the business for more than 20 years, and who are having very good track record, these things are quite obvious about the estate agents, but also this thing should be kept in mind that profitability to the estate agent would only be given if the customers are attracted and bought the product. If the customers are from the reference of any estate agent then the estate agent would be given 2.5 percent of the profit on that particular property which means after taking out all the overheads and costs out of the price, but the company needs to be very fair in judging this because it is in relation to the company's reputation, which if once ruined then would hardly be able to form again as the estate agents are important part of this entire housing scheme. There is also a condition in agreement, that is the agreement between the estate agents and the company would only be for one year which would start right after the houses are created. The idea is to have only two or three big estate agents in the beginning for one year, this would also motivate them to give us business as they would be earning through us only for one year. Later on it would be very easy for the company to evaluate which of the estate agents deserve further agreement. Also we need to have special permission as an agreement from the Italy's government. The Budget The Marketing Budget: The marketing budget should be only 10 percent of the entire investment, it is because of the fact that the company has not started full operations and is just entering into the market. The marketing is indeed requires a lot of investment as the charges of Yahoo and Google are fair enough these days through their ad service, which we would be using. The investment would also be done on advertising on countries websites. The Pricing: The pricing that we are willing to set is not unit cost pricing but it would be value based pricing which means that we would be charging a lot more than the costs but yet the price would be quite reasonable as the land is not very expensive in Apulia. Initially the plan is to develop ten houses, which are fully constructed. Lets assume that the fixed cost for building ten houses is pound 10,00,000, the variable cost per house is pound 25000 and the price per unit is set as pound 150,000, therefore the break even would be. B.E = fixed Cost/(Price - Variable Cost) = 10,00,000/(150,000 - 25000) = 8 houses It means that the complete break even would appear on just selling 8 houses, and the company would start making profit on selling the rest of the two houses. In value based pricing, the system is inverted from the cost based pricing. Customer Value Price Cost Product Investment Needs The investment needs would prevail once all the constructed houses would be sold, in fact if the increasing demand would appear and all eight of them would be sold within the six months of introduction then the company would start construction right after the sale of the eight houses. The similar procedure would be reapplied once the sales would be finalized, the best thing about EuroFlorida is that we are coming with a full plan. If the demand would be increasing then the next thing we would be doing is that we would move to make town houses in the same area which would be having another benefit of security, which is another frills attached service that the customer would get and also we would make sure that it would be an added strength. Contingency plan/ Profit & Exit In case we have been failed to sell more than eight houses in our two years set period, then we need to come up with a contingency plan according to which we would try our level best to sell the property to the locals of Italy on no profit and no loss situation. We would be firing most of the staff members and only would work on the basis of sales force. In case we face some natural calamity and we have our constructed houses destroyed, then this would never affect us because we would insure all of them through some insurance policy. As it can be in relation to cost effectiveness, there is another policy we would have according to which we would sell our houses with the insurance and this would change the insurance cost on to the customers. Reference Bartol, K.M., D. Martin, "Management", New York: McGraw Hill, 1998. Kotler, Phillip, "Marketing insights from A to Z", New Jersey: John Wiley and sons, 2003. Hisrich R., M. Peters, D. Shepher, "Entrepreneurship", (n.p.): McGraw-Hill, 2005. Robbins S., "Organizational Behavior", (n.p.): Prentice Hall, 2003. Read More