Crystal Kahawa Inn Business - Assignment Example

Heading: Crystal Kahawa Inn Your name: Course name: Professors’ name: Date TABLE OF CONTENTS List of tables and contents Appendices A, B, C, and D Executive summary This executive summary concerns a new business venture called Crystal Kahawa Inn. In the report, the business plan shows that Crystal Kahawa Inn’s location is outside University of Nairobi, in Kenya. It also intends to expand its business through various outlets and franchises and licensed outlets in different universities in the country. In the plan, there is a description of the rationale for the establishment of the business in the country, which includes satisfying clients’ needs in the hospitality industry. Moreover, the report shows that Crystal Kahawa Inn will be start with an aim of providing high quality, reliable, secure, and affordable products to its all consumers. Clearly, the firm intends to acquire these objectives by employing members of staff who are highly motivated, committed, dedicated, and competent to work in the industry, and deliver quality services. Further, the firm is probable to flourish because hospitality industry is booming in Kenya. Besides, the availability of a diverse market for the products motivates its establishment. Additionally, Crystal Kahawa Inn is a limited liability business whose prosperity is dependent on competitors’ lack of knowledge of the low-income market segments. Since the company assumes a linear management structure, its major staff comprises of general manager, customer service manager, human resource manager, finance manager, sales and marketing executive, and planning manager. As a result, the key operational departments include finance department, human resource department, customer service department, sales and marketing department, and activity planning department. Each of the departments will have highly qualified personnel who can propel the firm towards the attainment of its vision and mission. In terms of the market environment, the plan shows that the firm might face stiff competition from already established brands in the country. These competitors include Galitos cafes, Java House, and Dolman’s Coffee House. There are other numerous coffee bars and houses in the city and across the country. Luckily, the firm will not have exit barriers. Nonetheless, the company will have entry barriers including government regulations and licensing. Its pricing strategy entails low pricing of products, and readjustments later when it is fully established. SWOT analysis demonstrates the company’s intention to offer high quality, reliable, affordable, and products; highly, qualified and dedicated personnel who ensure its full satisfaction of consumer needs. Besides, the firm will provide lowly charged products, and has a strategic position. Nevertheless, the might have weaknesses, such as, high training costs, short marketing budget and seasonal fluctuations. Its opportunities include fast growing industry, available low-income segment, and high demand for the products, especially by students. In terms of threats, insecurity, economic downturn, recession, and political instability might affect the firm’s performance. The company sets to handle the threats and weaknesses by differentiating its products, preparing a slightly overestimated budget, conducting extensive market study, training its personnel properly to satisfy consumer needs. The firm will also conduct extensive promotional and marketing campaigns to acquire and retain as many clients as possible. Some of the promotional strategies include advertisement, personal selling, trade fairs, exhibition, and social media. Notably, the plan also includes balance sheet, revenues, project even analysis, profit and loss projection for the next three years. Introduction Purpose The main purpose for this business plan is to explore on the Crystal Kahawa Inn venture in University of Nairobi, Kenya. Notably, the plan attempts to clarify some of the significant business details including its finances, human resources, operations management, regulatory environment, and the appropriate marketing strategies. Additionally, the business plan intends to identify, refine, and extensively describe the firm’s competitive advantage, and aims at steering it to the full attainment of the set goals and objectives. Crystal Kahawa Inn is a business set to deal in selling of high quality coffee, not only around the University of Nairobi, but also across the country, especially in other universities like Moi University, Kenyatta University, Egerton University, and Maseno University. The business venture has total distribution license, franchise, and operation rights in Kenya. Moreover, the firm plans to be operational all over the country via its intended franchises and branches in various aforementioned universities. As per the plan, the firm aims at identifying and effectively satisfying its clients’ needs by providing reliable, quality, safe, affordable products and services in comparison to other coffee firms in Kenya. Product/service description In the plan, the major focus is on Crystal Kahawa Inn business. The firm is set to be established outside the University of Nairobi, Kenya, and later to be expanded to other universities in the country, such as, Kenyatta University, Jomo Kenyatta University of Agriculture and Technology, Moi University, Egerton University, Kenya Methodist University and Maseno University among others. The major proprietors of the business venture include Brian Wright and Allan Smith. Additionally, the firm expects to acquire full registration under the Kenya Coffee Traders Association and the Coffee Board of Kenya in order to get full permission to operate in the country. The country’s constitution also requires the firm to register for operation in different parts of Kenya where it intends to operate to achieve a professional indemnity insurance policy. Furthermore, the company’s purpose is to offer high, quality, affordable, reliable and safe products to its all its clients. Crystal Kahawa Inn has its core strengths and competencies, as well as its vision and mission statements. In terms of the vision, Crystal Kahawa Inn intends to become the best coffee house in the country. Its mission is to become the leading joint where students, locals, and staff of the universities in Kenya can meet as they comfortably savor the best quality coffee and pastries. It also intends to offer the most comfortable place where clients can relax after a hard-day’s work through the availability of consumer-friendly products and services, and convenient location. Besides, the firm aims at providing products and services that fully satisfy its clients’ needs. It also sets to consider highly its shareholders’ interests, particularly during the profits investment. In terms of strengths and competencies, the firm plans to charge the least costs for its services and products as compared to its competitors. In addition, the company sets to employ highly certified and qualified personnel that meet consumer needs fully. Crystal Kahawa Inn also has highly committed and dedicated owners whose main aim is to ensure effective product and service delivery to its clientele. Crystal Kahawa Inn falls under the hospitality industry, and intends to offer quality services and products that will keep its customers coming back for more. It also serves both male and female customers, mostly university students in Nairobi and other parts of the country. Another objective of the product is to meet its consumer needs of secure, high quality, affordable, and reliable services and products. Explicitly, the high demand for coffee beverage by staff, locals and university students, as well as the steady development of the industry in the country will enhance the venture’s success. Its products include Mochas, Flat White, Short White, Cappuccinos, Espressos, Lattes, and Café Mocha. It will also offer baked snacks like pastries, sandwiches, hot dogs, and burgers. The firm will prepare its products by use of espresso machines, hot water, and milk. Therefore, it is prepared to facilitate essential training on the effective preparation of products, as well as quality service delivery. Notably, the company will have distinct advantages and features including state-of-the-art buildings that are attractive to clients, outside the University of Nairobi, and other universities in the country. Additionally, the high quality, affordability, safety, reliability, and highly qualified personnel play a great role in favoring its prosperity. It is also worth-mentioning the fact that the company has the most committed and dedicated proprietors who intend to ensure that the venture’s operations effectively meet the consumer needs, and lead to the full realization of its set vision and mission. Just like any other business, Crystal Kahawa Inn anticipates various challenges in its operations, which include brand image creation, and acquisition and retention of the clients. The already developed brands in the Kenyan market create this problem. Moreover, the firm is probable to experience steep competition facilitated by many coffee restaurants and houses in the city and other parts of the country. There is also a possibility of facing a challenge in realization of its set goals and objectives (Bangs 2002, pp. 67-100). Background Crystal Kahawa Inn is a coffee and pastries venture that is set to be located just outside the University of Nairobi and other universities across the country. Its key objective is to develop into a leading coffee bar or restaurant in Kenya. Some of the motivating factors for its establishment are low quality coffee beverages and pastries; high charges of coffee drinks; unreliable coffee products and services offered in other existing restaurants in the country. Thus, the firm’s establishment happened in accordance with its key purpose of satisfying its customer needs in the industry. What is more, the firm’s establishment will be instrumental in serving Kenyan community through creating job opportunities, and thus, promoting the country’s economy. Assumptions Crystal Kahawa Inn’s establishment will take place with assumptions that the company will grow into the best coffee bar. There is an assumption that the company will make maximum profits by providing unique products and services to its target market. Definitions The name Crystal Kahawa Inn consists of two English words: crystal and Inn, as well as Swahili word: Kahawa for coffee. Crystal refers to a solid in which atoms are neatly organized or arranged microscopically. In this case, crystal refers to fine and quality coffee sold. Inn means a building or establishment where people or travelers seek for food and drink. Situational analysis Mission Crystal Kahawa Inn’s vision entails becoming the best coffee house in the country. Its mission is to offer secure, affordable, high quality, and reliable products and services to its entire clientele in Kenya. The firm sets to provide of quality services to meet its clients’ needs, and maximize its profits. Besides, the firm targets university students, members of staff, and other employees and businesspersons in the city. The company’s interest entails full satisfaction of shareholders and consumers’ needs. Structure and management Crystal Kahawa Inn has will adopt a linear structure and management. It will have a linear organization structure that implies the existence of authority and responsibility levels in the firm. Besides, this means that the company has efficient internal communication among departments and members of staff. This kind of structure is significant in the organization of information in a sequential way. Some of the firm’s departments consist of customer service, finance, human resources management, sales and marketing, technical, and activity planning departments. Each department has certain responsibilities and duties, but the jointly function to meet business goals and objectives. The customer service section facilitates provision of high quality services and proper handling of consumers. It also ensures that the firm appropriately receives and treats its customers, and that a sale of products is suitable. The department is indispensable in the firm as it ensures proper recording of consumer information (Goodman 2009, pp. 235-240). On the other hand, the firm’s finance department is in charge of controlling its money so ascertain suitable utilization. It also analyses and accounts for its financial state, and enhancement of its capital prosperity. Furthermore, finance department monitors business wage and bonus payments to staff and shareholders (U. S. Department of Labor 2008, pp. 59-100). Firm’s activity planning is in charge of planning and execution of its activities. This means that the section allows firm’s internal and external operations. It also collects sufficient data relating to the company via various channels. On the other hand, U. S. Department of Labor (2008, pp. 59-100) notes that the human resource management section deals in workers’ welfare, payments, and wages. Further, it facilitates proper recruitment of highly trained and dedicated personnel that can move the firm towards the achievement of goals and objectives. The company’s sales and marketing department is vital in the marketing and promotional activities of the firm’s products and services. It will also have a general manager responsible for supervisory role of each company activity. The general manager is also in charge of execution of plans, policies and programs, and decision-making processes. He or she will also handle firm’s daily activities and affairs, as well as its resources and assets’ management. Additionally, the manager will facilitate proper handling inventory, staff, and creation of new strategies for firm’s expansion (U. S. Department of Labor 2008, pp. 59-100). Market environment Competition In spite of the fast developing hospitality industry in Kenya, there is a steep competition that existing developed brands offer to new ventures. This is one of the most probable threats to Crystal Kahawa Inn’s operations. This is explicit in the prior research findings that demonstrate that there are numerous existing coffee bars and houses in the city and other parts of the country, such as, Java House, Dolmans coffee, and Galitos cafes. Therefore, the company is set to prepare adequately to deal with competition through its competitive edge that include provision of exclusive coffee parlor well-brewed coffee; comfortable chairs and settees, free internet connection, soft music that ultimately offer its clients a wonderful and relaxing time in the Crystal Kahawa Inn; and quality, safe, reliable, and pocket-friendly coffee and pastries. Exit and entry barriers The company has no exit barriers. Nevertheless, there are distinct entry barriers, which include government and licensing regulations. This implies that the firm’s establishment must meet the Kenya business licensing board, Coffee Board of Kenya, and Kenya Coffee Traders Association requirements. Pricing and servicing standards While trying to uphold reliability and quality of its services and products, the firm will set affordable prices to capture a wide customer base. These price settings also meet the government’s regulations and the consumer needs (Ferrell 2011, pp. 159-229; Benun 2008, pp. 1-20). Sales figures Clearly, the firm’s sales analysis shows that it will make approximately $400,000 within the first year, $500,000 in the second year, and 700,000 within the third year. Plant and equipment Crystal Kahawa Inn will need numerous things necessary for its start-up, and effectively operation in the market. Some of these requirements strongly committed and high qualified personnel; enough operation funds, sufficient space for expansion across the country. It also requires effective infrastructure for successful operations. Skills assessment The firm needs certain skills to operate smoothly and effectively towards the satisfaction of consumers and realization of business vision and mission. These skills include bachelor’s degree of human resource management, finance, sales and marketing, customer services, and planning. Additionally, the company’s personnel should consist of leadership and administrative skills (U. S. Department of Labor 2008, pp. 59-100). Therefore, the firm intends to recruit competent individuals that meet all the aforementioned qualifications. Risk analysis This part of the plan addresses the firm’s SWOT analysis: Strengths It will sell its products and services at affordable charges It will provide high quality services and products to its customers It will be set in strategic locations to capture a wider customer base than its competitors It will hire strongly committed and highly qualified task force Weaknesses It will face very high personnel training costs to ensure quality service delivery It is likely to design a short budget for marketing It is probable to experience seasonal market fluctuations Opportunities It will enjoy a steady development of the hospitality industry in the country It will also enjoy a high demand for coffee and pastries in the country The availability of low-income segment will favor the firm’s success Threats The economic downturn might negatively affect firm’s operations There is a possibility of economic recession Insecurity, such as, terrorism and student’s riots, might adversely affect the business operations Eminent political instability might have a negative influence on the firm’s performance There is a likelihood of competitors setting very low prices to acquire many clients Handling threats and weaknesses The company can readjust its marketing budget to cater for every requirement The firm will develop a creative advantage through differentiation of its products and services The firm will employ only the most committed and qualified personnel The company will source finances from prospective donors to cater for staff’s training The company will perform an intensive and extensive marketing and promotional strategies to gain a wide market than its competitors Operational plan Major business objectives The following are business objectives for Crystal Kahawa Inn: To provide clients with distinctive coffee products and pastries in the country To become the best coffee inn in the country by providing high-quality, reliable, secure, and affordable products To clearly identify and effectively meet client’s needs in comparison to its business rivals To make approximately $ 50,000 profits per year To generate considerable profits within a short duration To enhance consumer’s acquisition and retention by end of the first year Marketing As per the research findings, it is clear that the hospitality industry in Kenya is experiencing certain challenges. There are various consumer needs, which the available coffee houses and bars have failed to meet effectively. The company’s research team studied ways of meeting the needs effectively (Ferrell 2011, pp. 159-229; McDonald 2011, pp. 23-50). Besides, it was imperative to identify the total expenses in the firm’s operations prior to its establishment. In addition to the operational costs, the study team investigated on the prospective profits that the company would attain every year. Marketing positioning To access all the possible clients, the firm intends to establish many other branches and outlets in the country. It also plans to expand the business in the near future through franchising. Additionally, to cope with competition by existing firms, Crystal Kahawa Inn is set to create a competitive advantage through differentiation of its products and services. This implies that the business will provide affordable, quality, reliable and safe products, and services to all clients in order to overcome other existing brands (Ferrell 2011, pp. 159-229). Pricing strategy The company plans to set its prices in terms of fixed and current cost prices. It also aims at set charges for its products and services in order to attain its objectives and goals. After getting stable, the firm is set to raise its costs to expand its operations across the country. This is crucial in increasing it services and products recognition and the sales volume, and thus high profits per year. What is more, Crystal Kahawa Inn’s pricing will design its pricing strategy with a consideration of its competitors. This means that the other brands’ services and products charges prices are higher that the company’s. Thus, it is probable to attain a broader market share than its competitors. Imperatively, the company fixes low prices since it has highly sensitive clients (Hooley, Nicoulaud, & Piercy 2011, pp. 1-20). Target market Demographics Crystal Kahawa Inn’s target consists of a broad variety of consumers situated in different parts of the country, especially the University of Nairobi students. Some of the clients include university students, university members of staff, businesspersons, and other individuals working in the city. It will also consist of students of different universities in the country. Notably, the firm’s clients will comprise of young and old, female and males individuals. Motivation The firm’s products and services are on the high demand because students get the target market gets busy during the day, and need a relaxing and comfortable place to relieve themselves of the day’s stress. Additionally, the consumers need to unwind and rejuvenate at the end of the day, before they get into another busy day. Lastly, the firm’s products and services are crucial in satisfying customer’s needs efficiently. When to buy? Crystal Kahawa Inn anticipates that its consumers will purchase its services and products throughout the year because universities are always in session. Besides, businesspersons and members of staff work always throughout the year; hence, providing a reliable market for the firm’s products and services. Buying patterns The firm expects to a steady purchasing patterns of its coffee products, particularly by the university students. Projected amount of purchases The amount of sales the company will make is dependent on the customer’s needs and financial statuses. Clients’ price and expenditure sensitivity levels The spending behavior of the company consumers depends on some factors, and their clients’ needs. Majority of the firm’s customer volume consists of students who rely on government loans; university staff whose household income is about $15,000 per year; and workers in various companies in the city whose average annual household income is approximately $ 16,000; thus, their spending rates largely depends on their financial position. In relation to the price sensitivity, the target consumer is highly sensitive to charges; hence, a probability of moving to the business lowly charged products and services. Communication channel Crystal Kahawa Inn sets to access the market through sales promotion, social networking, advertisement, trade fairs, personal selling, and exhibitions. Distribution The company sets to distribute its products and services to the target market segments through customer service representatives, franchises, and other licensed outlets. This is important in ensuring that the company adequately accesses all the target segments; hence, maximum profits. Promotional strategies The company plans to promote its products and services through promotion, social networking, personal selling, exhibitions, and trade fairs (Hooley, Nicoulaud, & Piercy 2011, pp. 1-20). Some of the social media networking sites include Twitter, Facebook, and MySpace. The estimated cost of marketing and promotion the company will incur $200,000 per year. These activities are instrumental in facilitating the acquisition and retention of as many consumers as possible to the firm. Sales targets With effective capacity and infrastructure, Crystal Kahawa Agency expects to make a sum of $400,000 within the first year, $500,000 in the second year, and 700,000 within the third year. Financial plan Sources of funds To start with, the company plans to acquire its operation finances from owner’s personal savings. Secondly, the firm plans to get funds in form of loans from various financial institutions in the country. It also intends to distinct external and internal donors. Historical financial figures The firm has no historical figures since it is a new venture in the market. Start-up expenses The firm’s projected start-up expense is $407, 000, which comprises of sources of capital, such as, investment requirement of $3,000,000; as well as start-up expenses in term of personnel costs of $500,000; capital expenditures of $300, 000; business license $400,000, consulting services $7,000; and Promotion of $200,000. In terms of the sales, Crystal Kahawa Inn projects to make a sum profit of $400,000 within the first year, $500,000 in the second year, and 700,000 within the third year. In the appendices below, there is a demonstration of all the company’s financial details and issues. Conclusion The business venture regarding Crystal Kahawa Inn is feasible in that it has a favorable market environment, operational plan, and financial plan. It is target market consists of university students, university staff, and workers in the city. Some of the marketing strategies to use in the firm include sales promotion, personal selling, and social media. In the company’s financial plan, there is a possibility that it will make substantial profits within the first three years. Therefore, it accorded support is essential to ensure its prosperity and to boost the country’s economic status. References Bangs, DH 2002, Market Planning Guide, Kaplan Publishing, Chicago, pp. 67-100. Benun, I 2008, The designer's guide to marketing and pricing: how to win clients and what to charge them, How Books, Cincinnati, Ohio. Pp. 1-20. Ferrell, O 2011, Marketing strategy, South-Western Cengage Learning, Mason, OH. Pp. 152-229. Ferrell, OC & Hartline, M 2007, Creating a business plan: expert solutions to everyday challenges, Harvard Business School Pub, Boston, Mass. Pp. 17-86. Fox, S 2009, E-riches 2.0: next-generation marketing strategies for making millions online, American Management Association, New York. Pp. 93-153. Goodman, J 2009, Strategic customer service managing the customer experience to increase positive word of mouth, build loyalty, and maximize profits, AMACOM, New York. Pp. 235-240. Hooley, G, Nicoulaud, B & Piercy, N 2011, Marketing Strategy and Competitive Positioning, Pearson Education, New Jersey. Pp. 1-20. McDonald, M 2011, Marketing plans for services a complete guide, Chichester, West Sussex, John Wiley, UK Hoboken, NJ. Pp. 23-50 U. S. Department of Labor 2008, Occupational Outlook Handbook, 2009, Skyhorse Publishing, New York. Pp. 59-100. Appendices Appendix A Start-up expenses Crystal Kahawa Inn Sources of capital Investment requirement $3,000,000 Total investment $3,000,000 Start-up expenses Personnel $500,000 Business Expenses $400,000 Capital Expenditures $300,000 Promotion $200,000 Consulting services $ 7,000 Total start-up expenses $4, 407,000 Appendix B Cash Flow/Cash Position Breakeven Analysis Crystal Kahawa Inn Cost Description Fixed Costs ($) Variable Costs (%) Variable Costs Consulting services 20.00% Personnel 4.00% Fixed Costs Personnel $500,000 Business development $400,000 Consulting Services $ 7,000 Capital Expenditures $300,000 Promotion $200,000 Taxes $40,000 Total Fixed Costs $1,407, 000 Total Variable Costs 24% Breakeven Sales level $337680 Appendix C Balance sheet projection Balance Sheet (Projected) Crystal Kahawa Inn Beginning Projected Year 1 Assets Current assets Cash in bank $40, 000 $3, 000,000 Accounts receivable - $30,000 Prepaid expenses $5,000 $5,000 Total current assets $45,000 $3,035,000 Fixed assets Training materials $400,000 $800,000 Furniture $200,000 $200,000 Total fixed assets $600,000 $100,000 Total assets $878, 000 $3,135000 Liability & equity Current liabilities Accounts payable - $70,000 Long-term debt - - Bank loans payable - $3,000,000 Total liabilities $0 $3,070,000 Owners’ liability Retained earnings-beginning $600,000 $700,000 Retained earnings-current $0 $400,000 Total owners’ equity $600,00 $1,100,000 Total liabilities & equity $600,00 $4,170, 000 Appendix D Profit and Loss Projection (3-year) Year 1 Year 2 Year 3 Revenue (sales) Training materials $400,000 $2,000,000 $4,000,000 Total revenue (sales) $1,000,000 $2,000,000 $4,000,000 Operating expenses Business development $400,000 - - Capital expenditure $300,000 $600,000 $800,000 Personnel $500,000 $800,000 $900,000 Promotion $200,000 $400,000 $600,000 Consulting services $ 7,000 $14,000 $21,000 Total operating costs $1,900,000 $2,500,000 $2,321,000 Pre-tax profit $400,000 $ 500,000 $700,000 Taxes (10%) $40,000 $50,000 $70,000 Net profit $360, 000 $,450,000 $63,000 Read More