Business Plan: The Spirit Hop and Grape Company Asia Ltd - Essay Example

BUSINESS PLAN - FOR SHAG -(The SPIRIT, HOP AND GRAPE Company, Ltd The Business Plan The Spirit Hop And Grape Company Asia Ltd       Presented By        04 November 2005     The content of this report is confidential and is the sole property of The Spirit Hop and Grape Company Asia Sdn Bhd. Its use is strictly limited to those readers authorized by the Company. Any reproduction or divulgence of the content of this report without the written consent of the Company is prohibited.    TABLE OF CONTENTS Executive Summary The Products The Offer Organisational Overview Strategic Analysis Strategic Issues Marketing Plan Production/Operations Plan Organisational Plan Financial Plan Critical Risks Action Plan Appendices     Executive Summary   The purpose of this business plan is to provide a blueprint for import and distribution of SHAG (the beer), SHAG RTD (Ready to drink) and SHAG Blue (caffeine and guarana) from Holland. Dark Horse Imports Inc., is a soon to be launched branch of The Spirit, Hop and Grape Company (SHAG), to commence operations in January 2006 and is ready to import and distribute premium lager SHAG and other related products in the Australian marketplace. Dark Horse Imports Inc. is dedicated to providing the Australian public with the best tasting, premium beer the world has to offer and also aims to control and distribute all SHAG related products for Australia.   1. The Team Dark Horse Inc. is a local management company in Australia which depends directly on The Spirit, Hop and Grape Company (Asia) Ltd. Dark Horse will import Shag lager from Malaysia and will take responsibilities of all the logistic process, from Malaysia to the final consumer, and also all the marketing and promotion activities. The management team for Shag is highly motivated and well qualified for the job. It will consist of Joseph P. Keenan II (CEO), Jacint Fité (CFO) and Benjamin Jeffery (Marketing and Sales).   2. The Products   We will be concentrating on the Australian Beer Market because of the size and the growth rate of the market and will launch the following products The first product that we will be launching will be SHAG, a premium lager "microbrew" type beer due to the lack of any real competition in this marketplace. The second product will be Blue SHAG Vodka plus, a delightful Vodka drink based with taurine, guarana and caffeine. The third product is a "fab" drink. Following the trend of "fab" drinks, SHAG will launch its own exciting range of fruit-flavoured fermented alcohol drinks. SHAG Beer: Brewed traditionally in Holland, with long lagering and fermentation process, Shag Lager has an alcoholic content of 5% ABV. Using natural spring water, superior malt, hops and yeast from Holland respectively. The end result is a premium lager superior to other major brands. Shag is supplied in 24-pack cases consisting of 300ML bottles in cluster (six-pack) packaging. Major Benefits - Superior Lager - Superior taste compared to other major brands in the market Potentially Strong Market Presence - for the growing and large Australian Beer Market Unique and Attractive Packaging Use of Superior Products from Holland Supplied in Convenient Packaging Blue SHAG Vodka plus: Vodka-based drink with taurine, guarana and caffeine. Described as being a better tasting product than most other Blue drinks, Blue Shag has an alcoholic content of 5.5% ABV. Its unique, 250ml bottle and their marketing plan through merchandising will ensure people keep coming back for more. Major Benefits- Unique Taste Aim for Customers wanting more of Shag - 250 ml bottle Unique Marketing Plan Saleable as the Best Blue Drink in the market Appropriate Alcohol Content SHAG "fab": Following the trend if "fab" also called flavored alcoholic beverages, SHAG will launch its own exciting range of fruit-flavored, fermented alcohol drinks. Fab’s has been widely credited with a maintained sales in an wider alcoholic drinks markets as the more traditional spirits markets decline . The combination of naturally fermented alcohol and delicious fruit juices will make this 4% ABV drink a must for any mixer drinker. Flavours include will be Orange, Blueberry Pl+s (energy drink), Lime, Cranberry, Lemon Ice and Dandelion & Burdorock. RTD drinks has experienced an increase of 14.5% in volume and 14.1% increase in value. It also represents a 10% of total alcohol volume.   Major Benefits - Trendy fab drink Unique fruit flavoured, Delicious Drink Contemporary Alcohol Drink Strong Brand Presence Targets the Young, Hip and Happening Crowd SHAG with Energy: A new product, ‘Shag with Energy’ - is a delicious, carbonated, taurine/caffeine-based drink. It boosts daily vitamin intake and puts the energy back. Supplied in 250ml cans.   Major Benefits Unique carbonated, caffeine based flavour Source of vitamins and energy Trendy drink with strong brand presence Comes in convenient ready to drink 250 ml cans. Suitbale for the Young and the Market targets 18-40 year olds.   3. The Offer  The Offer given by Dark horse Imports Inc to Shag Asia is distribution and imports of Beer from Asia to major cities of Australia. This is done in consultation with the CEO, Shag, Asia.   4. Organisational Overview   4.1. Registered Name Dark Horse Imports Inc. 4.2. Commencement of Operations Dark Horse Inc., will soon be launching a branch of The Spirit, Hop and Grape Company, to commence operations January 2006 in Australia. 4.3. History In the earlier 1990s, Australian consciousness was tapped by startling realisation: Beer is supposed to have flavour. Europeans have been savouring ale, port, pilsner and stout for centuries. But in Australia, such news was a revelation. Foreign beer started appearing here and there. One by one, Australian beer drinkers sat down with unfamiliar brews from unknown sources - Stella, Heineken, Corona, etc. As they sipped, they were quietly converted. Imported European beer became the beer aficionado’s small stash of joy. Ten years later, it’s a beer bath. Australia is one of the top regional markets in terms of beer consumption with approximately 15.8 percent of the total malt sales in Asia Pacific Region.1 The regional beer industry in Australia is a 13.6 $AUD Billion a year business with Australians consuming 1.7 billion litres of beer in 2003. Australia is one of the top regional markets in terms of beer consumption with approximately 15.8 percent of the total malt sales in Asia Pacific Region. While major local brewers still account for most of the beer production in the region, foreign imported lager beers are at the forefront of the beer revolution. The Australian Beer Market has been for some time dominated by European companies such as Stella, Heineken, Corona, etc. Recognising the tremendous growth opportunities in the lager industry and the continued demand for good-quality beer, The Spirit, Hop And Grape Company (Asia) Sdn. Bhd was formed in 2002 to distribute a premium Dutch lager beer that would appeal to beer drinkers who enjoy a full-bodied beer (such as current drinkers of imported European beer and those of locally produced premium domestic beer) and are willing to pay extra to get a superior tasting product. The Spirit Hop And Grape Company (Preston) Limited has perfected a recipe for its premium lager beer called "Shag" and we the Spirit Hop And Grape Company (Asia) Sdn. Bhd are ready to distribute a finished product in sufficient quantity to meet projected regional demand within the Australian Market. The Dark Horse Imports Inc. will operate as a branch of Shag that will promote and distribute Shag products from Malaysia to major Australian cities. The company grew out of collaboration between the Spirit Hop And Grape Company (Asia) Sdn. Bhd led by CEO, Anand Balasingam based in Kuala Lumpur, Malaysia and Dark Horse Inc, a local management, import and distribution company in Australia in the year 2005. A. Balasingam (CEO, Shag Asia) and Joseph P. Keenan II (CEO, Dark Horse Australia), along with Jacint Fité (CFO, Dark Horse, Australia) and Benjamin Jeffery (Marketing and Sales, Dark Horse, Australia) reached an agreement to bring Shag products into the Australian market. The company aims to target the large and expanding beer market and introduce unique and delicious alcoholic and energy drinks using its promotional campaigns and emphases on the SHAG Brand name. Operations will commence in January 2006. 4.4 Mission Statement To provide the Australian public with the best tasting, premium beer the world has to offer. 4.5 Vision Statement To control the import and distribution of all SHAG related products for Australia. Bringing a new Shag culture in the market through promotional activities and controlling a substantial portion of the annual A$13.6 Billion Australian Beer and Drinks market. 4.6 Organisational Objectives 1. Become long term trading partners with major Australian Liquor retailers and distributors. 2. To educate the Australian public about Shag and what Shag represents. 3. To maximise shareholders wealth. 4. To introduce new innovative products to the Australian market within a 2 year time period. 4.7 Organizational Values - Good relationship with distributors - Brand name notoriety. - Non cut pricing policy - Motivation of the sales department. 4.8 Founders and Management Team Dark Horse is the local management company in Australia which depends directly on The Spirit, Hop and Grape Company (Asia). Dark Horse will import Shag from Malaysia and will be take responsibilities of all the logistic process, imports from Malaysia to the final consumer in Australia, and also all the marketing and promotion activities. The management team will consist of Joseph P. Keenan II (CEO), Jacint Fité (CFO) and Benjamin Jeffery (Marketing and Sales). The team comprises of personnel from diverse backgrounds who have a wide range of professional experiences, huge talent and creative ideas, and the potential to lead and manage one of the best and the largest lager distributors and importers in Australia. Joseph P. Keenan II, the CEO of the company comes from a background in various types of Sales and Marketing roles in which he was extensively involved with the successful launch of several products. His most recent role was that of Professional territory manager for UCB Pharmaceuticals in which he oversaw an over ten million (US) dollar a year territory and was voted most valuable manager several years in a row due to his extreme success in the launching of various new products which were constantly being added to his company’s portfolio. His skills gained from the extremely competitive US Pharmaceutical industry makes him a synergistic fit for the new role he is taking on as CEO. Jacint Fite comes to us with an extremely strong background in banking. For the past several years Jacint has been in charge of corporate accounts for one of Spain’s largest banks. He has been involved in all aspects of the financial planning process for several major clients over the years and now is brining that knowledge to Dark Horse. Jacint is also an excellent fit due to the fact that the types and size of financial transactions that he has been involved in are of the same magnitude as our current venture, which is why he is the perfect fit for the role of CFO. Ben Jefferies, our only Australian, has worked in the advertising industry for the past several years at a strategic level on a number of major brands where he gained an understanding of how to promote and manage all aspects of brands. He also has a background in sales where he worked for a major Melbourne soft drink manufacturer, which gives us access to some key contacts in the Melbourne area who may be able to help distribute the brand. This experience makes him a perfect fit for the position of Marketing and Sales Manager. The management team has 1. Proven business start up and launch of new products skills 2. Proven expertise with a mix of financial analysts, marketing strategists, and operations managers 3. Personality Profiles and Professional records that show possibilities of a unique team approach and collaborative working methods 4. Proven Leadership Skills and Success in Promoting a New Concept or Product in a Challenging Competitive Market 4.9 Major Milestones Achieved to Date 1. Shag Premium Lager and Drinks is a renowned Brand name within the UK, Asia and now Shag marks its presence in Australia. 2. Shags promotional and marketing campaigns have been unique and has helped popularise the brand name. 3. Shag uses the best materials from Holland and has an excellent track record for consistency and quality 4. Shag is professionally equipped to meet regional demands and plans expansion across Asia Pacific and Australia within the next 12 months 5. Shag has been able to identify the unique market needs in UK, Australia and Asia to bring the best quality lager and drinks that provide energy, tastes superior and can compete with other local and global brands. 4.10 Brief Biographies of the Management Team Joseph P. Keenan II CEO Positions held: Professional territory manager for UCB Pharmaceuticals Keenan oversaw an over ten million (US) dollar a year territory and was voted most valuable manager several years in a row due to his extreme success in the launching of various new products which were constantly being added to his company’s portfolio. His skills gained from the extremely competitive US Pharmaceutical industry makes him a synergistic fit for the new role he is taking on as CEO. Jacint Fité CFO Positions held: Corporate Accounts In Charge (Banking Industry, Spain). .For the past several years Jacint has been in charge of corporate accounts for one of Spain’s largest banks. He has been involved in all aspects of the financial planning process for several major clients over the years and now is brining that knowledge to Dark Horse. Jacint is also an excellent fit due to the fact that the types and size of financial transactions that he has been involved in are of the same magnitude as our current venture, which is why he is the perfect fit for the role of CFO. Benjamin Jeffery Head - Marketing and Sales Positions held: Marketing Manager/Advertising Ben Jefferies, has worked in the advertising industry for the past several years at a strategic level on a number of major brands where he gained an understanding of how to promote and manage all aspects of brands. He also has a background in sales where he worked for a major Melbourne soft drink manufacturer, which gives us access to some key contacts in the Melbourne area who may be able to help distribute the brand. This experience makes him a perfect fit for the position of Marketing and Sales Manager. 4.11 Proposed Business Structure 4.12 Board Structure Within the Board, the Management Team will be represented by Joseph P. Keenan II (CEO), Jacint Fité (CFO) and Benjamin Jeffery (Marketing and Sales Head). They will be in direct consultation with A. Balasingam (CEO, Shag Asia) and will be responsible for distribution of Shag across Australia as a branch of Shag Asia Ltd. An independent non-executive Chairperson may also be appointed with preferably a legal and/or business administration background to oversee the companys position and responsibilities in the Australian market and to facilitate contacts with retailers and liquor buyers. Shareholders, investors, liquor buyers, other distributors and retailers are major players in the success of the company.   5. Strategic Analysis 5.1 Market definition Current drinkers of imported European beer as well as mass-produced domestic premiums are the largest markets for Shag Premium Lager. However, segments within this primary group of customers are targeted by each group of competitors Shag 5% abv Premium Lager will be marketed against. Positioned as a premium imported lager for beer drinkers of discerning taste, Shag lager will compete directly with other foreign premium lagers with significant distribution in the region such as Stella, Hogarden, Corona and Budweiser. The target market for Shag is from 18 to 40 years old, trendy people who like to be different. “Yuppies”, who have the disposable income to afford our products & for the ones that cannot afford it we must create a strong aspiration to experience Shag. The target market must also comprise of individuals who are “liberal” / “laid back” / “chilled” people who consume about 80 litres of beer a year. People who drink in groups are also strong targets. There lies the enormous impact of the baby boomers generation. Many have reached or are reaching their peak earning potentials, and they are changing their attitudes and spending patterns to reflect their affluence. This not only has led to an increase in the number of imported beers available as the majority of baby boomers seek out high quality gourmet products, but has also fuelled the growth of premium wines, gourmet coffees, bread and so on. Baby boomers are those individuals between the ages of 30 to 49. Much of the consumption of baby boomers is imported beer. In addition to the baby boomers market, the post baby boomers who can legally consume alcohol are those individuals between the ages of 18 to 30 constitute the next largest market segment that Dark Horse Inc. will tap. The third significant consumer market is the 50-to 64 year old age group. Also our target segment is growing rapidly. There is an acceptance of alternative beverages in the marketplace and a need for uniquely flavoured alcohol based light strength drinks and Shag Blue and Shag energy can carve a niche in this sector. With the introduction of Shag Premium Lager, Dark Horse Inc. will compete against other imported beers for a share of the defined market. 5.2 External environment 5.2.1 Industry Analysis General market and environmental trends Stagnant sector at A$12 billion Mid-strength/Light products have gained public acceptance Growth of boutique beers Growth at the expense of beer and bottled spirits Premium trend moves away the demographic of consumers from working class males towards a more sophisticated and female consumer. Ageing population: lower-alcohol preferred 70% of fall in beer volumes can be attributed to the rise of pre-mixed drinks Move to moderation (drink-drive laws) Increasing popularity of wine (18-30 group consumes an average of 11 glasses per week) and RTD Standard lager dominates (A$6.8 billion) intense price competition and promotion Growth in gaming: huge dollars/profit involved, drop off in food/bistros down Large impact of weather factor (barbecues and outdoor activities largely associated with drinking beer. Social and Attitudinal Trends Beer Strength Reduced: In an effort to reduce the price of major products, Foster’s and Lion Nathan have both announced a reduction in the alcoholic content of a number of their key brands. Strong Growth Of Non-Traditional Beer Types: dark beer and stout, growing with the proliferation of Irish and British theme pubs. Guinness and Kilkenny dominate, distributed by CUB. Mid-strength beer, which usually contains 3.3-3.5% alcohol, is preferred over true light beer in the states of Queensland and Western Australia, while drinkers in all other states prefer light beer which contains 2.5-2.9% alcohol Economic Trends Large number of young consumers with disposable income Alcohol, beer and alternative drinks sector showing rapid growth and stands above A$12 billion market Marketing approach is important for higher sales figures Huge growth in young urban population and pub culture Increased wine consumption and money spent on drinks 5.2.2 Market, customer & competitor analysis The Australian beer market is currently dominated by standard lager, with premium beers only recently becoming a major competitor for market share. As a consequence, there are only a few players in the market, with several international players trying to get a foot in, as the case is for SHAG. The largest market share holders and competitors for SHAG in today’s market are: The main strength of the Australian beer giants (CUB and LNA) against foreign competition is threefold: 1. Massive amounts of capital 2. High control over distribution network 3. Australian consumers has high loyalty toward national brands (with the 20 top preferred brands in 2001 all being made by either CUB or LNA) These barriers are however not impenetrable, especially in the case of premium brands and by the fact that they by themselves do not have significant market power nor employ the same strategies (CUB having national brands, LNA regional). These are loopholes that can be exploited by foreign competitors. Finally, wine has also in later years been stealing market shares from the beer portion of the alcohol market. This has however as of yet not been at the expense of premium brands, but more of standard lagers and some low-alcoholic liquor brands 5.3 Australia’s attractive beer market There are several good reasons for SHAG to enter the Australian market for premium beer. As previously explained, the Australian outdoor culture (much together with its climate) with beaches, barbeques and sports have been one that favours the consumption of low alcoholic beverages. As a result, Australia is the world’s third heaviest consumer of beer per capita behind Germany and the UK, with an average of 88.5 litres in 2002. The internal market of 20 million inhabitants also makes it the largest market in the Oceanic region. In the Australian beer market, the premium segment seems nowadays to be the most exciting, and for numerous reasons. Because when the beer market in general has been at a stand still in later years (and actually dropped in consumption from 111 litre per capita in 1990 to 88.5 litre per capita in 2002). The premium market keeps stealing overall market shares and has experienced growth of 140% in the last 5 years (compared to overall growth of 1.2% in 2003-2004). This together with much more favourable margins has resulted in that the premium market constitutes 11% of total market volume and as much as 20% of market value in 2005. Furthermore, the anticipated growth of the premium segment is expected to grow by 49.3% from 2002-2007, with standard lager sales expected to fall by 6.3% in the same period. In addition, there are also considerable holes, in the market for premium beers in Australia, with the existing brands more or less trying to target the same type of consumers. The largest gap is in that of young people aged 18-29 and women, which traditionally have been the groups with the lowest consumption of both beer and alcohol. Though morally and ethically difficult, this is a part of the alcohol market that can be further exploited, as seen by the recent success of “alcopops” throughout the world. Realising this, premium beer manufacturers in amongst other Europe has used this to their advantage, and brands like Desperado have had great success with marketing and distribution procedures similar to that of the “alcopops”. There is nothing to suggest a similar strategy would not work in Australia, and it still remains untried. 5.4 Market Descriptions The Alcohol Market was at a total volume of 2.100,147 showing a value of A$ 11,274,262 Beer sold for A$ 5,024,006 according to a annual market overview presented in March 2004 with annual growth of 8.1%. RTDs showed a market value of$1,768,363 by March 2004 reporting an annual growth of 14.1%. The RTD Market Overview shows a decline in vodka sales but growth of Scotch, Dark Rum and Bourbon varieties although Vodka, Rum, Bourbon and Scotch make up for 93% of total liquor sales. RTD consumers are reasonable affluent middle class Young drinkers between 18 and 39 make up a major portion of the consumers of RTDs and alcoholic beverages Although Beer makes up for more than 55% of FGL share, RTDs show the highest market growth in 2004. This analysis proves that market growth is highest for alternative drinks/RTDs sector and Shag RTD can have a major impact on the market. The high FGL share for the Beer industry proves that introduction of Shag Premium Lager can be highly profitable at this stage. The introduction of Shag energy drinks and Shag Blue is seen as aiming towards this growth of the RTDs in the Australian drinks market. 6. Strategic Issues There are several different types of strategies that we plan to use to in order to get the SHAG brand name out in the market. We plan to use viral marketing involving a combination of guerrilla marketing as well as undercover marketing. These will be effective tactics due to the low marketing budget that we have. Due to Shag’s unique position as being a premium imported “microbrew,” it must be treated as such. We cannot afford to take-on the “Majors” (Victoria Bitter, Foster’s, Crown Lager, etc.) head-on. If Stella Artois or Heineken decide to penetrate or "refresh" any area/country, they will do it! The key element to their success is power = money, as they have endless amounts of it! Then sometimes, when it doesnt quite go right for them, they will step back, not worry too much, have a re-think, and then go again - purely because they can afford it! At this point we cannot consider this for ourselves. We cannot compete ‘price on price’ with the market leaders. What we have is U.S.P. (Unique Selling Points). The unique selling points are: A brand name that will ALWAYS turn heads, attract interest2 (along with disapproval) - the disapproval from some creates "In your Face" approval from the modern thinking people of today. People that want to push things to the limit... the ones who want to say: "Hey, Ill have a Shag, so what?” All in all, since we know we cannot take our competitors head-on, we do suggest that we take a disruptive approach instead of a challenging approach when competing with other “more established” brands. Some of the tactics that we may want to consider would be things like billboards saying things like “Sydney are you ready for a SHAG”, with our web address at the bottom and one of those cheap to make web ads this will hopefully get the viral marketing approach started. The program objectives will be structured to reward individual goal achievement, but also to doubly reward and promote teamwork. "Get SHAGGED Points" will be earned for new retail outlet which will sell Shag premium lager. Not only will points accumulate with each new consignment order transaction - when an individual meets or exceeded his/her individual per case sold goal, points automatically doubled. If the retail outlet (Any Licensed Venue) meet it’s per case sold goal, then everyones points doubled. Points will be earned on a monthly basis and will be redeemable quarterly 7. Marketing Plan 7.1 Initial Marketing Program Objectives (first year) Promote brand awareness and encourage retailers and consumers to try something new by being (SHAGGED) Increase sales through strong point of sale presence Increase attention to (Have You Been SHAGGED Yet) using products promotion and increase share in the marketplace Build and solidify loyalty among SHAG agents and their businesses Leverage an interactive program to manage short-term promotions and build for future long-term objectives Reward sales efforts with items that could be used in the course of their work day or at home 7.2 Long Term Marketing Program Objectives Establish a strong presence in the Australian Lager/RTDs market Establish Long term business relationships with customers, liquors retailers, buyers and distributors. Establish trust and brand respect from investors and shareholders Establish significant sales record to show the strong brand presence 8. Operations Plan The initial centres for imports will be Perth and Melbourne, dark Horse Imports centres. 7.1 Import/Distribution Policy Dark Horse will distribute to trusted retailers only Components are delivered according to availability. Quality checks are in place throughout the distribution and imports process 7.2 Import/Distribution Capacity   Units Blue Shag Lime Shag Cranberry Shag Orange Shag Shag Premium Lager Year 1 22 pallets 20 pallets 20 pallets 20 pallets  22 pallets Year 2 Year 3 Year 4 Year 5 7.3 Operations Scheduling The manufacturing process will be supported and carried out by Shag Asia Ltd. With sophisticated production management and advanced equipment and techniques. Dark Horse will be responsible for maintaining a fully relational database and keep track of inventory, payments, purchases, imports, distributions, invoicing and will produce detailed job cards and reports for each days operations. A monthly report and annual reports will also be provided. 9. Organisational Plan 9.1 Organizational Structure: The Organisational structure and Chart has already been provided and we provide a more detailed analysis of the Organisational plans using changing patterns over the next five years. 1st year Board – 4 members Chairperson/ CEO Admin Staff 6 Marketing Staff 3 Production Staff 10 5th Year Board – 10 members Chairperson/ CEO Admin Staff 20 Marketing Staff 10 Production Staff 40 Finance Staff 15 Sales Staff 30 R and D Staff 10 9.2 Organizational Budget Organizational Expense Details Qtr 1 $000 Qtr 2 $000 Qtr 3 $000 Qtr 4 $000 Year 1 $000 Year 2 $000 Year 3 $000 Year 4 $000 Year 5 $000 Administration 10 10 10 10 40 50 100 200 300 Management 20 20 20 20 50 100 200 300 400 SHAG production           1,500 3,000 5,000 10,000 Training 20 20     30 40 50 50 50 Marketing 20 20 20 20 50 400 500 500 500 Financial Plan 9.1 Underlying Assumptions · Dark Horse will purchase a subtantial quantity of Shag products from Shag Asia Operations will be set up in Perth and Melbourne initially · Sales invoices will be paid when units are dispatched to retail outlets · Each months imports are sold in the following month · Income taxes will be determined by sales and profits Accountant and legal help to be taken 9.2 Financial Highlights · All cash surplus will be reinvested into the business · Cash or profits are expected to be in the positive in each year of operation · $1 million committed to R&D Financial Terms in Purchase/Distribution: -AUD3.00 per case is allocated to Shag agency for P.O.S, Marketing & Entertainment. -35% order value paid on placement of order to Shag Asia, 65 % paid prior to release of goods. Critical Risks Risk Dimension Perceived Risk Development Low/Moderate Management Low/Moderate Marketing Low/Moderate Financial Low/Moderate Valuation Low Financing Low/Moderate Exit Low/Moderate Action Plan - SWOT Analysis Strengths 1. Alliance with Shag Asia 2. Quality products 3. Can be successfully marketed in Australia 4. Tasty. Delicious Drinks 5. Skilled and committed team 6. Superior Products 7. Brand Name 8. Large consumer Base Weaknesses 1. Reliance on particular type of consumers – young, trendy 2. Fluctuating costs 3. Management team not cohesive or definite 4. Board not final 5. Sales team not final 6. Limited Brewery and beer distribution experience 7. New company – needs strong marketing 8. No experience in Australian market Opportunities 1. Expanding beer market 2. Strong market growth 3. Pub culture – high demand 4. Increasing awareness/ demand of specialty wines, beer 5. Market for all alcoholic and RTD beverages Threats 1. Competitive market 2. Limited opportunities 3. High number of competitors – other lager varieties 4. Home grown brewery challenges 5. Beer and lager market and wine market already strong Appendices APPENDIX I- Shag European ads. APPENDIX II Porter Analysis The factors in the diamond and their relation to the Australian beer industry (premium beer in specific) are: Porter’s diamond figure3 Factor Endowments - A nation’s position in factors of production necessary to compete in a given industry. Australia has several of these necessary factors; an experienced and highly educated workforce, a healthy and efficient financial system that encourages investments, an excellent education system, governmental encouragement of investments and entrepreneurship, a well developed infrastructure together with some of the basic factors needed like climate and demographic:, which most of the people in Australia living in trendy, urban areas close to beaches, fitting for the niche SHAG is addressing. Demand conditions - The domestic demand for the industry’s product. As previously noted, Australia has the third largest per capita consumption of beer. This does not only create a large demand for the product, but also increases consumer sophistication seen by later years large growth in premium brand beers and alcopops. Total market size for premium beers was $AUD 1.3 billions in 2002 and forecasted growth is strong. Demographics also play a role here; with the demand for premium beer being strongest in the urban areas SHAG intend to be in. This will help SHAG push its product further on. Relating and supporting industries – Presence/absence of international competitive supplying and related industries. Due to high demand the distribution system in Australia for alcoholic beverages is excellent, with the last-point-of-sale being the bottle shops, found in abundance in even rural areas. The major cities have several trendy pubs, clubs, and hotels, where a “see-and-be-seen” mentality prevails and behavioural patterns are being observed – fitting for SHAG. The railway, shipping and trucking industry is also highly efficient in distributing goods between the major cities. Ports of entry are also efficient, but can at times be slow due to the great fear of biological material being brought into the country and the threat of terror. There is an international competitive marketing industry (especially when it comes to ads for alcohol), and a strong presence of bars and night clubs in every major city. The wine industry and liquor industry is also internationally competitive and renowned. One could possibly relate all this to what is referred to as a cluster of industries, where many successful industries within a country are grouped into clusters where valuable knowledge can flow between the firms, benefiting all. Firm strategy, structure, and rivalry – Domestic rivalry and the conditions governing how corporations are created, organised, and managed. Firm management in Australia, including the beer and beverage industry, is by large based on people with financial and legal backgrounds, like in most parts of the Anglo American world. This should prove to be to SHAG’s advantage, as manufacturing will not be done in Australia. The necessary focus can then be placed on margins and costs, when important manufacturing decisions are left to the parent. The pitfall, however, is according to Porter that too much emphasis can be placed on short term profit. A financial management can also be valuable because of the fierce competition in the Australian beer market, even if SHAG is targeting a neglected niche. Rivalry should induce SHAG to create new ways of efficiency, and thus give the company a better position for international business. From the above it should be clear that the Australian market is strong on most of the factors in Porter’s diamond, and should thus be an attractive market for SHAG to be a part of. The cluster of industries and the fierce competition in the beer market could be especially valuable for further expansion, while the hole in the market can prove to be a great way to enter the market and realise a profit. Read More