Mugs and Cups Incorporation - Case Study Example

prepared Executive Summary Mugs and Cups Inc. has been registered as part of the specialty utensils industry, offering kitchenware in huge varieties. From its inauguration in 2007, it was known to be a retail store for crystal mugs, ceramics and other items intended for kitchen use. It distributes goods from two big Chinese companies namely Whenzou Times Co. Ltd. and Blueshoots and for other small manufacturers. A year after the company was established, it is now venturing out into operating a coffee shop that also aims to sample the goods being retailed by Mugs and Cups, Inc. This coffee shop shall be built within the Mugs and Cups Store and shall be called Crystal Mugs Coffee Shop. Target date of operations will be in July 2008. This report is intended to be presented to prospective investors and bank executives, who would make the vision of expanding the business a success. Table of Contents Background ----------------------------------------------------------------------------- 3 Discussion ------------------------------------------------------------------------------ 4 Financial Estimates ------------------------------------------------------------------- 5 Summary -------------------------------------------------------------------------------- 8 Appendixes ---------------------------------------------------------------------------- 9 I. Background Crystal Mugs Coffee Shop is a spin off of Mugs and Cups, Inc. with the objective to sample to target market the kitchen utensils being offered by the retail store. Another objective is to be able to give customers a waiting area while shopping for kitchen utensils at Mugs and Cups. To deliver comfort to the target market, Crystal Mugs will invest on the best coffee ingredients and a barista who is an expert in various coffee mixes. Crystal Mugs is owned and managed by the same owner of Mugs and Cups. It will be operated under sole proprietorship and will be run by another group headed by the operations manager and new batch of service crews. Its target market includes existing customers of Mugs and Cups and the residents and visitors of New York City, particularly along the areas of Washington Park Square and Greene Street. It promises to offer excellent coffee product lines. We aim to be one of the highly recognized local coffee shops in the area, competing with the local Starbucks outlets. To promote the business, Mugs and Cups will do various advertising strategies such as advertisement placements and display of merchandising materials where applicable. To start with, print ads and press releases shall be placed starting a month before the scheduled inauguration date. This is to build up the target market’s interest in the company’s products and services. Streamers and mini billboards to announce the store locations shall also be installed in the city’s busiest places. The website of Mugs and Cups shall also be utilized to advertise this new business development to entice existing loyal customers to visit the coffee shop. II. Discussion Crystal Mugs may be considered an expansion project, as this will provide the company owners with added opportunity to venture into new products than the existing ones. This new offerings are actually different from the initial products because this time, the store will offer consumer products with a different market segment. Whereas Mugs and Cups offer utensils and is considered to be a specialty store, aimed at capturing a particular market segment, Crystal Mugs has a wider market that presents a product that may be considered a need rather than just a want. With this, it promises better market feedback. To ensure that the coffee shop will be by itself competitive, the owner shall conduct researches on various coffee mixes ad the sources of the best ingredients. Starbucks is a tough competitor, being established and already having a steady throng of loyal customers. The only way to attract customers is to offer competitive prices and introduce new coffee blends that would definitely catch the target market’s attention. Crystal Mugs, while being a traditional coffee shop, aims to offer unconventional mixes, experimenting with herbs and spices to captivate the target market’s discriminating tastes. To be able to accomplish this, the management team considers importing selected ingredients as well. In time for the target opening in July, food researches are now being conducted to ensure that a final menu will be ready by end of June 2008. The final menu includes a list of final ingredients, with quantities projected for purchase for the first six months of operations. Costs shall be included in the projected start up expense. This expansion will definitely entail a higher investment, as the owner needs to acquire new equipment to deliver the products. On top of this, a good store design and ambiance is needed to contribute to the image of the company. This is essential to be able to contend with main competitor Starbucks. This new development will definitely provide an edge to the Mugs and Cups Inc. retail store because of the new and diverse products. The expansion will attract a wider range of customers due to the new products to be offered. Crystal Mugs’ edge over main competitor Starbucks is that if offers a fresh line of products. Despite being young and small, Crystal Mugs is giving Starbucks a run for their lives in certain specific areas in New York City. III. Financial Estimates Capital Expenditures Operational Costs Advertising and Promotions Budget Explanation Of Basis For Planned Budget A. Size of the company The Crystal Mugs team will basically be a small group. The management team will be composed of the operations manager and new batch of service crews who would be implementing all programs in their respective stores. The projected budget shall cover all the expenses for this size of management and operations team. Crystal Mugs will do consignment of the items from Mugs and Cups. As such, there would be no chance that the products would be wasted, as only the sold items shall be paid for. B. Marketing Plan Crystal Mugs will go heavy on merchandising and on-line marketing activities, although it will also use print advertisements to reach the target market. The budget allotted shall be allocated for the production and placement of print ads and the production and maintenance of outdoor banners and advertisements. A huge amount shall be allocated for the preparation and maintenance of the company website. This website shall be a venue for online orders. This will reach audiences in different cities in the US. C. Targets The budgetary requirements have been spread all throughout the first year of operations to be able to determine the needed cash flow. A modest increase in sales was projected per month and the targets may be changed depending on the actual sales trends and the feedback of the market on the product line. D. Analysis of Start Up Requirements IV. Summary Crystal Mugs wishes to position itself as the preferred coffee shop for New York’s diverse crowd, targeting the working men and women and possibly the younger crowd.. As such, it will utilize every opportunity available to be able to penetrate the target market and gain revenues to continue its operations. To meet its corporate objectives, Crystal Mugs shall maximize the capital investments and ensure a positive cash flow through meeting targets and creating a workable profit and loss chart to monitor the transactions. Budget is tight for the first year and as such, management shall be more than careful in its decision making for the business. Employees shall carefully be chosen and the owner shall make sure that each personnel are oriented towards achieving its corporate goal which is to start gaining profit by the end of the first year. Competition would be very stiff with the presence of Starbucks in the area but Crystal Mugs is very positive that it can tap the target market to be able to take a share of the pie so to speak. Crystal Mugs is also confident in being able to make gains through its Internet Business since this type of sales channel is very popular among the target market. Its Marketing efforts shall be intensified to ensure that the corporate message is brought across the target market. To cap this off, Closet wants to achieve two things with the business: to allow Mugs and Cups to market its products to new customers and to have its own steady followers. V. Appendix A. Definition of 5 Terms Related to Business B. Vision Mission Statement Crystal Mugs intends to be the preferred coffee shop in New York, offering new coffee blends at a reasonable price. It promises to be an advertising and retail arm of mother company Mugs and Cups as well. C. Logo Memo D. Competition Memo E. Newsletter Official Newsletter Volume 1, Issue 1 CRYSTAL MUGS LAUNCHES THE FREE REFILL PROMO To mark Crystal Mugs’ pilot store opening in April, a special promotion for early bird coffee lovers shall be implemented for the whole month of April. Available only to the first 50 patrons per day, the free refill may be availed of with a minimum purchase requirement of any coffee product. This special offer aims to attract coffee lovers from the vicinity who wish to enjoy the perfect blends of coffee products at a reasonable price. CRYSTAL MUGS INC. EMPLOYEES ENJOY COMPANY OUTING Crystal Mugs employees enjoyed their first ever company outing this March when they spent one weekend at the Sea Crest Resort. The company outing did not only aim to promote friendship and camaraderie among store crew members and the management team, but also to establish a sense of belongingness through various team building activities implemented. Employees and managers participated in these activities and eventually emerged with a stronger sense of affiliation with the company. President and CEO boasts of this activity as a culmination of a very strong relationship among the company employees, “We hope to create a team that would be united in achieving corporate objectives”, he mentioned. F. Mechanism Memo G. Advertisement Press Release: A haven for coffee lovers – that’s what Crystal Mugs is all about! Crystal Mugs is the newest and hippest coffee shop at the Greene Street in New York City. We specialize in the most exotic coffee blends that would surely satisfy New York City coffee lovers’ discriminating tastes. As opening offer, we are serving refills for every first 20 patrons everyday for the whole month of May. To avail of this promo, visit the Crystal Mugs along Greene Street or call us at xxx-xxxx for more product information. Works Cited Research and Markets. Retrieved March 18, 2008 from http://findarticles.com/p/articles/mi_m0EIN/is_2007_Oct_22/ai_n21055279 Read More