Sustainability, Operational and Financial Issues - Coursework Example

Entrepreneurship: Feasibility Report al Affiliation Table of Contents Table of Contents The Business Opportunity 4 Executive Summary 4 Research Strategy 5 The Business Opportunity 6 Market Gap 6 Product Offering (add more info that link to Middlesex st.) 6 Feasibility: Micro-Market Analysis 7 Target Market Size 7 Current Trends 8 Dynamics 8 Target Behaviour 9 Customer Profile 10 Feasibility: Macro Market Drivers 10 PESTEL Analysis 10 The Main Market Drivers 12 Overall Market Size 13 Feasibility: Competitive Environment and Direct Competitors 13 Porter’s 5 Forces 13 Analysis of Direct Competitors 15 Feasibility: Sustainability, Operational and Financial Issues 15 USP (Unique Selling Point) 15 Critical Success Factors (CSF) 15 Start‐up Financing 16 Post Start UP Financing 16 SWOT Analysis of the Business Opportunity 17 Feasibility: Managerial Capabilities and Resources 18 Personal Capabilities 18 Reference List 19 The Business Opportunity Juice Bar is a refreshment store that offers healthy fresh juices to its customers. The business will be located in Middlesex Street (Liverpool street underground station) in London, UK. Executive Summary The lack of healthy refreshment store in the area offers Juice Bar with the needed foundation for success. The UK fruit juice market is an organized and a well-developed market. Over the last couple of years, the sector has experienced moderate growth. It has continued to attract more players as evidenced by the growing number of brands and juice outlets in the country. In Middlesex, the number of stores offering the healthy alternatives is very low. This has therefore denied the population the chance to consume healthy refreshments. The enterprise will target this younger population as its key market. The UK fruit juice market is an organized and a well-developed market. Over the last couple of years, the sector has experienced moderate growth. It has continued to attract more players as evidenced by the growing number of brands and juice outlets in the country. More UK citizens are opting for more healthy choices available to them in the market. With such vicissitudes, fresh juice drinks are becoming more common. Juice Bar will provide the users of the terminus with a health refreshment option that will not only allow them to meet their energy requirements but also ensure that they remain fit and healthy. The target market for the Juice Bar enterprise will be made up of the younger generation, which is more conscious about their health and wellbeing. This group is concerned about the amount of sugar that they consume in the beverages and juices. By selling products and juices that are made from natural fruits and raw materials, Juice Bar will be giving the consumers value for their money. Juice Bar will create a theme of healthy living that is preferred by most consumers. To be able to achieve its intended goals, Juice Bar will need the contribution of different stakeholders. Some of the people who will be key in the success of the business include the suppliers, an interior designer, equipment supplier and an accountant. All these people will have specific roles which they in ensuring that the business is up and running. Research Strategy The primary research for the Juice Bar business was conducted through questionnaires that were distributed to the potential clients in the area. The participants were asked seven questions concerning the juice selling sector and their preferred refreshments. On the basis of the feedback obtained from the survey, an information on the sector was obtained. The decision to use questionnaires was influenced by the fact that it allowed for getting of first-hand information about the key aspects of juice selling and the consumer preferences. Moreover, the use of questionnaires allowed for the collection of information, which was relevant to the study. This is because the participants were asked specific questions and were to give answers which directly related to the issue being investigated. Finally, the questionnaires made it possible for all the participants to be asked similar questions so that a comparison can be done of the feedback which they gave. The research design also entailed collecting other key information and data on the juice and refreshment industry from secondary sources. Due to the fact that it is not easy to get actual statistics on the market numbers and trends from first primary research, secondary sources were incorporated into the research approach. Data from credible secondary sources was, therefore, used to argument the information collected from the primary research. The Business Opportunity Market Gap The UK fruit juice market is an organized and a well-developed market. Over the last couple of years, the sector has experienced moderate growth. It has continued to attract more players as evidenced by the growing number of brands and juice outlets in the country. There are a wide range of refreshments available to the UK consumers (Allis, 2013). Despite this being the case, more people are shifting from the unnatural options towards fruit juices. Buyers are now limiting the quantity of non-healthy beverages that they take as more attention is given to healthy alternatives such as fresh juices. High sugar content and the negative potential effects of such refreshments have made consumers resort to healthier options. In the last four years, tackling the problem of obesity has become one of the top government agendas. Citizens are being advised on the recommended daily sugar intake (Datamonitor Plc, 2008). The fruit juice beverages value has grown to surpass the synthetic products (Kyle, 2009). The trend is attributed to the growing culture of health drinking among the UK consumers. In Middlesex, the number of stores offering the healthy alternatives is very low. This has, therefore, denied the population the chance to consume healthy refreshments. As such, Juice Bar will be able to exploit this untapped market to grow and expand. Product Offering (add more info that link to Middlesex st.) Juice Bar is an independent healthy juice store located in Middlesex Street (Liverpool street underground station) in London, UK. Liverpool Street is a central London Railways terminus that connects London Underground to the north eastern corner of the London City. It is the terminus of West Anglia Main Line as well as the local and the regional trains that serve East London (Derbyshire, 2001). The traffic flow in the station is usually high owing to the high number of routes that are served by the station. Middlesex Street is located next to Liverpool Street and this gives it a very good commercial potential. The study which was conducted in the area revealed that there are no fresh juice stores. Juice Bar will therefore provide the users of the terminus with a health refreshment option that will not only allow them to meet their energy requirements but also ensure that they remain fit and healthy (Burrow & Kleindl, 2012). The consumers will have the option to choose from a variety of fruit juice options that will be offered in the store. All the products will be natural and made from fresh fruits so that the consumers are able to maintain healthy diets. Feasibility: Micro-Market Analysis Target Market Size With over 60 million people visiting the Liverpool Street underground station in London, UK, the target market for Juice Bar is undoubtedly large. About a quarter of the people who come to the underground station visit Middlesex Street (Derbyshire, 2001. However, the enterprise will need a small market penetration to be able to achieve the intended profitability. According to Mackenzie (2011), the natural juice options appeal more to younger population which is more conscious about health and physical wellbeing. Thus, the enterprise will target this younger population as its key market. According to Derbyshire (2001), over 40 million of the annual visitors to the Liverpool Street underground station fit this particular description. Out of this number, about 20 percent is likely to consume the fresh juice and other available healthy options. The revenue from this target population will be key in the success of the enterprise. Current Trends The beverage sales volume has continued to fall in the last few years. According to BizPlan (2012), the fall in sales is attributed to the calls by the consumers and the involved stakeholders for the producers to reduce the sugar content in the products. More consumers are concerned with the health implication of the kind of beverages and juices that they take (Hoggart, 2009). About 46 percent of adults have upped their efforts when it comes to monitoring the amount of sugar that they through the beverages and juices. In response to these changes, juice markers have gone ahead to reduce the sugar content in their products to the recommended levels. Jemma (2011) notes that most of the UK citizens and residents are becoming aware of the nutritional aspects of their lives. This kind of knowledge, coupled with the desire for healthy lifestyle has led to the evolution of juices and other fruit drinks in the last five years. The low sugar juices have attracted a lot of attention with producers using them to revamp their sales and performance in the market. It is, however, worth noting that about 55 percent of consumers are not concerned with the naturally occurring sugars in the beverages. As a result, stores and producers have taken the all-natural positioning as a long term business approach. Others have resorted to coming up with mixed flavor options which have additional nutritional benefits. Dynamics The conditions in the UK fruit juice industry have become sour in the last five years. Prior to turndown, stores and producers enjoyed a very healthy growth trajectory with their disposable incomes growing. The demand for healthy options, coupled with the encouragement by the government, has however provided hope to the industry players that the downward trend will not last for a long time (Jemma, 2011). It is however worth noting that the carbonated soft drink and the cheaper beverages like the fruit flavored drinks and squash still pose the biggest threat to the growth of fresh juice sector. Unlike the carbonated beverage sector which is dominated by multinationals and international brands, the fresh juice sector is more fragmented with individual stores competing to cut a niche for themselves (Jemma, 2013). Generally the dynamics in the juice sector remain low. Target Profile From the research that was carried out, it was found that the target market for the Juice Bar enterprise will be made up of the younger generation, which is more conscious about their health and wellbeing. This group is concerned about the amount of sugar that they consume in the beverages and juices. The target profile can be described as shown below: Age: 15-40 years Occupation: Students, professionals and home markets Average Expenditure on beverage per year: above £100 Number of time they comes the fresh juices in a day: Varies from individual to individual Heath consideration: Very important They opt for heath option rather than the popular brands of unhealthy beverages Receptive to new options Target Behaviour Health conscious Prefers juices with low sugar levels Prefers fruit juices over the smoothies Open to new ideas Healthy living Customer Profile The ideal target customers for the Juice Bar enterprise are the younger consumers who travel more through the Liverpool street terminus. This particular group takes fruit juices for refreshment and as a nutritional supplement. Their profile can be summarized as shown below. Age: 15-40 years Occupation: Student, professional, business people and home makers Travels frequently They like healthy options Feasibility: Macro Market Drivers PESTEL Analysis There are five major factors that affect the fresh juice sector and the entire beverage industry that will influence the operation and success of Juice Bar in its area of operation. These factors are considered under the PESTEL Analysis as discussed below. Political factors In the fruit juice industry, the political issues which may affect the operations and the success of the business include the changing taxation policies, food regulations and the safety concerns (Plunkett Research Ltd, 2009). The government has continued to encourage both foreign and domestic investments in the highly organized industry and this has facilitated the coming in of various big players in the market. Being a sector that deals with food, the government has also come up with the needed regulations which are meant to ensure that the consumers are safeguarded from any form of harm as they consume the beverages. Economic factors There are different economic issues that must be taken into account. Over the last couple of years, the UK GDP has consistently increased and this has in turn increased the disposable income available to the consumers. The income level in most household has increased thus giving individuals more spending powers (Shachman, 2013). The other economic concern is related to the raw materials used to make the juice. As a healthy option to the consumer, Juice Bar will be relying on fresh fruits from its suppliers. The fresh fruits sector is very delicate and any form of economic downturn will affect it and thus affecting the operation and success of Juice Bar. Managing the intense competition from other beverage brands and stores in the area is also an important consideration. Interest rates, real growth, government actions and inflation may also affect the business. Social Factors With the income of the middle class families increasing, the consumers are becoming more conscious about their health and wellbeing. Life has changed to become more hectic and tiring. Consumers are also shifting their preference to the healthier options with the younger generation leading the line. As consumers get more educated and knowledgeable on the health, they are resorting to healthier routes with regards to what they consume. Technological Factors Just like in other sectors, technology has a key role in quality and cost efficiency of the sector. Thus the amount of revenue and profit which will be generated by Juice Bar will be determined by how well it integrates technology into its operations and processed (Carmen, 2013). Better use of technology will not only enhance the quality of the products but also increase the efficiency of the processes. Environment factors The prevailing weather conditions and climate affects the consumption patterns. During the sunny conditions, customers tend to consume more of the fresh juices for refreshment purposes. Legal factors There are food and drug regulations that have been passed by the UK government to control the production and sale of fresh juice and other beverages. The consumer safety requirements need to be met by the company so as to comply with these laws and regulations (Carmen, 2013). The Main Market Drivers The increased public awareness and education appear to be a very critical driver in the fresh juice industry In March 2014, the Scientific Advisory Committee on Nutrition (SACN) recommended to the UK government to regulate the amount of sugar intake in the products which are consumed in the country. The government on the other had went ahead to enlighten its citizens on the health implications of high sugar levels. The effect of this enlightenment has been seen in terms of the changing consumption patterns. More UK citizens are opting for more healthy choices available to them in the market. With such vicissitudes, fresh juice drinks are becoming more common. The other issue that seems to drive the market is the need to fight obesity in the UK. By making the fight against obesity one of its key agendas, the UK government t has directly and indirectly influenced the operation and the growth of the fruit juice industry. Finally, the market is also driven by the number of available brand and substitute products which are found in the market. Multinationals such as Coca Cola and Pepsi have been in the market for quite a long time. They have very big brand awareness levels thus having an upper hand in the market. This has in turn influenced how other options in the market perform. Overall Market Size The fresh juice market size is very large. According to Cousins, Foskett & Gillespie (2012), the number of people consuming fresh juice in the United kingdom has grown over the last few years as it is viewed to be a more convenient and better option to the other beverages which are associated with various health concerns. It is therefore estimated that over 20 percent of the targeted population will consuming the products which are being offered by Juice Bar (Carmen, 2013). Feasibility: Competitive Environment and Direct Competitors Porter’s 5 Forces Rivalry (Low to Medium) The fresh juice industry has been experiencing a period of rapid development. This is attributed to the fact that more consumers are becoming educated and concerned about their health and wellbeing. In the present market, there are different beverage brands. It is however worth noting that in the area where Juice Bar is located, there is no other fresh juice store. The competition therefore comes from the other beverage options such as soda and mineral water. Generally, the level of rivalry can be considered to be medium since price wars will not be that intense. Entry Barriers (Medium to High) The fresh juice market has a very huge potential and thus it may attract a high number of new entrants. Considering the fact that there are no fresh juice stores in the area, the threat for new players coming into the market in which Juice Bar will be operating is high. When this happens, the level of rivalry will be high with the prices being a major competition tool. Threat of Substitute Products (Medium to High) In the present market, there are several substitute products which the consumers can opt for. Stores which sell other alternative products like sodas, juices and energy drinks are operating in Middlesex. According to Carmen (2013), the price of other beverages such as coffee tend to be lower than that of fresh juice. As a result, some consumers, especially those who are price conscious tend to choose these alternatives. With the prices of the alternative products being more attractive, pressure will be put on Juice Bar to come up with prices which are acceptable to the consumers. Supplier Power (Low to Medium) The fresh fruit suppliers have the ability to determine the price they will charge for the raw materials. Some of the fruits used in juice making need to be imported from other nations through the suppliers. It gives them the ability to dictate the charges for their goods. PET bottles which are needed to package the fruit are normally small, light and easy to manufacture. Due to the availability of other packaging options, the PET supplier’s bargaining power is greatly reduced. Generally, the burning powers of the suppliers appears to be medium. Consumer Power (Low to Medium) In the current market place, the consumers have many options owing to the high number of substitute products in the market. However, there are no stores in Middlesex which offer the same line of products as Juice Bar. According to (Carmen, 2013), more consumers are now conscious about the nutritional aspects of the beverages and this makes them choose for health options made from fresh fruits. When this is considered, it is apparent that the consumer bargaining power ranges from low to medium and this will allow the enterprise will dictate the price at which it sells its products easily. Analysis of Direct Competitors Despite the fact that there are no fresh juice enterprises in Middlesex area where the enterprise will be established, Juice Bar faces indirect competition from soft drinks, mineral water and other products. Stores selling carbonated and the non-carbonated soft drinks are the main indirect competitors. Flavored milk and butter milk products are also popular among consumers and they may affect the performance of the business especially in the initial year of operation. Feasibility: Sustainability, Operational and Financial Issues USP (Unique Selling Point) Consumers tend to buy items and beverages which are good in taste and those which add value to their lives. When the value that they get from the product is good, they tend to buy them more often. To be able to benefit for this behaviour, Juice Bar will create a theme of healthy living which is preferred by most consumers. By selling products and juices which are made from natural fruits and raw materials, Juice Bar will be giving the consumers value for their money. The healthy products will play a key role in ensuing their wellbeing. Critical Success Factors (CSF) Factor Description Location Middlesex street (Liverpool street underground station) Theme The enterprise will rely on the theme of healthy living to appeal to the consumers Products Juice Bar will sell products which are made from fresh juice so as to allow the consumers to remain healthy as they consume beverages Human Resources The enterprise will have qualified staff to be able to meet the needs of the clients Accounting All the accounting matters in the store will be done in a professional manner Management An all-inclusive approach will be used so as to fully benefit the clients and to encourage innovation and creativity Start‐up Financing Startup capitals is usually a very critical consideration in any business. To be able to finance the initial operations of the business, personal friend and saving will be used. This will be augmented by a personal loan form a friend. The main reason why a personal loan will be opted for is because it will not require repayment with interest. An initial capital of £ 50000 will be required to purchase the equipment needed and for the initial stock. Post Start UP Financing Like any other new enterprise, it is expected that Juice Bar may not profession especially well in its first year of operations. This therefore calls for pre start up financing which is meant to cushion it from the losses and the low sales. Moreover, the capital; will allow it to meets its contractual obligation with the suppliers and the other stakeholders. The revenue from the sale of the products will be fully reinvested into the business so as to ensure sustainability especially in the first year of operation. SWOT Analysis of the Business Opportunity Strengths Weaknesses The fresh juice sector has experienced significant growth over the last five years More customers are opting for health beverages Different flavors can be developed to help tap a wider market There is high public awareness on the benefits of fresh juices Lack of brand awareness Weak distribution channel in the initial stages of operation Juice Bar is new to the market and people are not aware of its products Opportunities Threats More people are health conscious and the fresh juices have become part of their diet There are no fresh juice shops in the area where Juice Bar will be operating in The government has been encouraging consumers to go for health food option thus offering a broader market Competition from established brands There are many alternative products in the market The threat of new entrants is very high Feasibility: Managerial Capabilities and Resources Personal Capabilities I have an enterprising personality that will allow me to implement the plan and successfully venture into the fresh juice business. Moreover, I am a strategic risk taker and this quality will allow me to succeed on the project. My other strengths are good communication skills and dedication to work. There are some areas where I need to develop. They include adapting to changes, persistence and creative thinking. Execution of CSF To be able to achieve its intended goals, Juice Bar will need the contribution of different stakeholders. Some of the people who will be key in the success of the business include the suppliers, an interior designer, equipment supplier and an accountant. All these people will have specific roles which they in ensuring that the business is up and running. The employee at the enterprise will be continuously be contributing to the good performance of the business by responding to the needs of the consumers. Reference List Allis, J. 2013, The Secrets of My Success: The Story of Boost Juice, Juicy Bits and All. Cengage Learning, London. BizPlan 2012, Juice and Smoothie Bar Business Plan. BizPlan, London. Burrow, J., & Kleindl, B 2012, Business Management.  Cengage Learning, London. Carmen, S, 2013, Consumption Culture in Europe: Insight into the Beverage Industry.  IGI Global, London. Cousins, J,   Foskett, D, & Gillespie, C 2012. Food and Beverage Management. Prentice Hall, London. Datamonitor Plc 2008, Boost Juice Bars Case Study: Marketing Smoothie Bars as a Healthy Alternative to Coffee Shops. Ipswich, EBSCO Publishing. Derbyshire, N 2001, Liverpool Street: A Station for the 21st Century. Macmillan, London. Hoggart, H 2009, The Uses of Literacy: Aspects of Working-Class Life. Penguin Adult, London. Jemma, P 2011, Hotel & Catering Review. Cornell University, New York. Jemma, P 2013, Economic Trends. Oxford University Press, London. Kyle, T 2009, Small Business Ideas: 400 Latest & Greatest Small Business Ideas. Borehamhood, Terry Kyle. Mackenzie, I 2011, English for Business Studies Teachers Book: A Course for Business Studies. Cambridge University Press, Cambridge. Plunkett Research Ltd 2009, Plunketts Food Industry Almanac 2008: The Only Comprehensive Guide to Food, Beverages and Tobacco Industry.  Plunkett Research, Ltd., London. Research and Markets 2015, Boost Juice Bars Case Study: Marketing Smoothie Bars as A Healthy Alternative To Coffee Shops. Available from http://www.researchandmarkets.com/reports/607213/. Accessed 22 June 2015. Shachman, M 2013, The Soft Drinks Companion: A Technical Handbook for the Beverage Industry.  CRC Press, London. Smith, A 2014, The Oxford Encyclopedia of Food and Drink in America. Oxford University Press, New York. Appendix 1 Month 0 1 2 3 4 5 6 7 8 9 10 11 12 Total Cash in Sales 0 20000 20000 20000 25000 25000 25000 25000 25000 26000 26000 26000 26000 289000 Own Fund 20,000 20,000 Loan 30,000 30000 Total cash in 50, 000 20000 20000 20000 25000 25000 25000 25000 25000 26000 26000 26000 36000 339000 Cash Out 1 Raw materials 2000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 38000 2 Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 52000 3 Power and Gas 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000 4 Repairs 50 50 5 Advertising 1000 800 800 800 800 800 800 800 800 800 800 800 1880 6 Telephone 20 20 20 20 20 20 20 20 20 20 20 20 20 240 7 Staff 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000 8 Equipment 25000 25000 9 Renovation 10000 10000 10 Licensure and Insurance 5000 5000 Appendix 2 Read More