Feasibility Analysis Of Health-point - Essay Example

FEASIBILITY ANALYSIS OF HEALTHPOINT INTRODUCTION The Proposed Venture is ‘HealthPoint’ which will be opened in Abu Dhabi, UAE as a General Partnership. The proposed business venture will be a restaurant which will be started as a health-focused eating service for the professionals and working people in Abu Dhabi UAE. The UAE market appears very attractive for this kind of business because of the eating habits of Arabic people and increasing health concerns among people. The organization will start its operations in the UAE market by first entering into Abu Dhabi. Because of the level of independence and inconsideration to the other legal aspects, HealthPoint will be established as a General Partnership between three investors. The sources of funds will be the share of capital by the three investors. To meet the legal aspects of the business as a General Partnership, one of the three investors will be a national of UAE with around 51 percent of the shares. The shares of the other two investors will be equal. In this section, the feasibility analysis of HealthPoint has been done by analyzing the market and competition situation. To analyze the market, STP approach and BCG matrix methodologies have been used whereas, to analyze the competition situation, Porter’s Five Forces analysis has been conducted. Finally, a survey has been developed which will be used to analyze the feasibility of the proposed business. MARKET ANALYSIS Segmentation, Targeting, Positioning (STP) Approach The UAE food market can be segmented into three major segments including the Retail Outlets (targets the resident expatriates community and covers 80 percent of the population base), Restaurant (Targets the tourists and the visitors community along with the health concerned resident expatriates) and other Market Outlets (such as ship chandlers, catering etc) (Rahman). Since our proposed venture falls in the category of restaurants therefore, only the market segments for this category will be considered. The target market for the proposed venture will be the health conscious people, professionals who seek to eat healthy food during their lunch breaks and workplaces and students who are concerned about their healthy diet plans. In order to attract the target market, the restaurant will be positioned as a healthy-food outlet rather than a food point. BCG Matrix Since various Western, Arabic and other small or big outlets of domestic and international brands are operating in Abu Dhabi therefore, there is a strong competition among companies. Because of the tough competition the market shares of each company is very low however, based it has found that because of the growing health concerns, Healthy Food business in the UAE food industry is growing and has a potential to grow further (Diala). Since most of the companies are at their initial stages in health food business therefore, based on their growing market shares and improving growth rate, in the BCG matrix, the Health Food Business can be categorized as a “Star”. BCG Matrix High Business Growth rate Low Star Question Cow Dog High Low Relative Position (Market Share) Most of the other companies operating in the market can be categorized individually as Questions because of their improving growth rate and low market shares. The reason of low market share has been already provided because of the strong competition. COMPETITORS ANALYSIS In order to analyze the competitive situation in the UAE food industry, Porter’s Five Forces Model has been used. Porter’s Five Forces Model Bargaining Power of Buyers The bargaining power of buyers in the industry is significantly higher because of the buyers are significant in number and usually have various food options to select from. Moreover, the number of suppliers available in the market is also significantly high. Bargaining Power of Suppliers Bargaining power of suppliers is significantly lower because of the availability of various options to acquire resources and variety of options. Threat of Substitutes Threat of substitutes in the UAE Food Industry is significantly higher because of the availability of variety of food options and restaurants. Threats of New Entrants Threats of new entrants are significantly higher because of the fewer barriers to entry and exit and less initial capital investment. Intensity of Rivalry The intensity of competitiveness is increasing because of increasing number of western based food companies in UAE and less degree of differentiation. The Porter’s analysis shows that the food industry of UAE is very competitive because of the growing number of restaurants. However, the low barriers to entry and exit, less government restrictions and less initial investment required, contribute to the attractiveness of this industry. Competitive Advantage HealthPoint will offer ONLY healthy products which will be a completely different idea in Abu Dhabi market and a source of competitive advantage for the company. Secondly, the way the company is planning to offer its services is also unique such as none of the healthy food companies is offering weekly plans and membership plans to professionals or students. In this way by introducing a concept of ONLY healthy lifestyle and by making it convenient for the people to access healthy food, HealthPoint will achieve a significant competitive advantage in UAE food industry. Strengths and Weakness of Competitors Afya Restaurant Strengths Offers desserts, eclectic and international food Attracts both domestic and international visitors Weaknesses Lacks the concept of healthy food Bay View, Beach Rotana Strengths Offers bar food, sandwiches, international, burgers and Mediterranean Attracts international visitors Weaknesses Lacks the concept of healthy food Lacks focus on one food area EBV Restaurant Marina Mall Strengths Offers international food, pizzas, juices, burgers, bar food etc Multi-cuisine options Weaknesses Lacks the concept of healthy food Lacks focus on one food area Mirabel Strengths Offers salads, sandwiches, vegetarian, desserts, multi-cuisine, café etc Attracts both health conscious and other food lovers Weaknesses Lacks focus on one food area SWOT of HealthPoint Strengths Weaknesses Only healthy food options A new concept initiator in Abu Dhabi market Limited food options Narrow customer market segments Threats Opportunities Growing competition and increasing saturation Growing health concerns among Arabians and UAE expatriates Government support to encourage investors in UAE and health food focus CONCLUSION Therefore, based on the above discussion, it is clear that to start a healthy food business is a viable and feasible option in the UAE market. The growing health concerns among the people in UAE because of increasing fast food restaurants and increasing obesity concerns is encouraging the companies to enter into healthy food area. The problem of accessing healthy food is actually difficult for the professionals or students who have to visit restaurants in their break or lunch times. In consideration to the growing customer demand, HealthPoint aims to target the health conscious people, professionals, working people and students. The market analysis shows that healthy food providers’ market shares are increasing and their businesses is growing. Porter’s five forces model highlights a tough competition in the industry however, Strengths-weaknesses analysis of a few competitors show that the existing providers lack a focus on healthy food segment. Therefore, the feasibility analysis shows that the proposed business idea is a good and feasible option. Survey Dear Respondents, A survey on “To Identify the Market and Demand for my Proposed Business Venture, HealthPoint” I am a student following University Name/Program in City name, Country Name. In partial fulfillment of the requirement of the program name, I am currently conducting a research on “The feasibility analysis of HealthPoint”, which is a proposed business. This questionnaire is designed to ascertain the demand of healthy food and healthy lifestyle in your area. Please answer all the questions as best as you can. Your responses will be treated with strictest confidence and will only be used for the purpose of this research. Please tick (√) in the correct box below. 1. Gender : Male ( ) Female ( ) 2. Age: 20-30 ( ) 31-40 ( ) 41-50 ( ) 51-60 ( ) 61 or older ( ) 3. Marital status: Single ( ) Married ( ) Divorced ( ) widowed ( ) 4. Education level: O’ level ( ) A’ level ( ) Diploma ( ) Degree ( ) Master ( ) Doctorate ( ) 5. Profession: Working ( ) Student ( ) non-working ( ) 6. Do you prefer healthy eating over unhealthy options? a) Yes b) No 7. Are you price conscious when it comes to eat healthy food? a) Yes b) No 8. Do you have an intention to purchase only healthy food stuff from HealthPoint? a) Yes b) No 9. If yes, how much you are willing to pay? ------------- (AED) If no, why? ______________________________________________________ 10. How often do you go for eating out? A. Many times a week B. Once a week C. Three to four times a month D. Very rarely E. Never 11. Do you want to avail the services as a member on regular basis? 12. What is your overall opinion of the proposed venture? A. Very positive B. Positive C. Neutral D. Negative E. No Opinion at this Time 13. Do you have any other comments, concerns, questions or thoughts concerning the proposed venture? ______________________________________________________________________________________________________________________________________________________________________________________________________ Thanks for your time and co operation. Name, Email Id and Contact No. (Optional) _________ Bibliography Diala, Criselda E. UAE health food sector shows fitness potential. 8 March 2010. 16 December 2010 . Rahman, S.A. Food Service Market UAE. 16 December 2010 . Read More